Adam, Klaus; Billi, Roberto M - C.E.P.R. Discussion Papers - 2003
optimal policy is to reduce the real rate by generating inflation expectations. This is achieved by committing to increase …’, i.e., average output and inflation turn out to be higher than their target values. Calibrating the model to the US … economy we find that the quantitative importance of the average effects on output and inflation are negligible. Moreover, the …