3  There are a number of empirical studies that attempt to decompose long-term government yields into the expected path of short-term interest rate and premium components. For Japanese government bonds, see Kei Imakubo and Jouchi Nakajima, “Estimating Inflation Risk Premia from Nominal and Real Yield Curves Using a Shadow-Rate Model,” Bank of Japan Working Paper, No. 15-E-1, 2015.
It also is supporting foreclosure prevention and neighborhood stabilization efforts, which help reduce unnecessary foreclosures and their costs on communities. Limiting foreclosures will also help reduce the risk that house prices will sink significantly below the level justified by fundamentals. The events of the past year and a half have highlighted the need for changes in our financial system.