Blanchard, Olivier; Galí, Jordi - Barcelona Graduate School of Economics (Barcelona GSE) - 2005
Most central banks perceive a trade-off between stabilizing inflation and stabilizing the gap between output and … inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new … trade-off between stabilizing inflation and stabilizing the welfare-relevant output gap. We show that not only does the …