-6model under optimal policy), the equilibrium unconditional variance of inflation is monotonic in inflation persistence for any given constant variance of inflation shocks. Of course, non-monetary factors may also have contributed to a lower variance of inflation.
For example, the variance of underlying exogenous shocks to aggregate supply and demand may have fortuitously and coincidentally fallen in tandem with the adoption of inflation targeting in many countries. I will now turn to a third factor behind the decline in global bond yields, the decline in term premiums that is estimated to have occurred in many countries over the past 20 years.