Guihai Zhao is a Principal Researcher in the Financial Markets Department at the Bank of Canada. He is a financial economist whose research interests include asset pricing and monetary economics. Guihai Zhao received his PhD in economics from Boston University.
Staff working papers
This equilibrium model explains the trend in long-term yields and business-cycle movements in short-term yields and yield spreads. The less-frequent inverted yield curves (and less-frequent recessions) after the 1990s are due to recent secular stagnation and procyclical inflation expectations.
Equilibrium bond-pricing models rely on inflation being bad news for future growth to generate upward-sloping nominal yield curves. We develop a model that can generate upward-sloping nominal and real yield curves by instead using ambiguity about inflation and growth.