Andrade, Philippe; Galí, Jordi; Le Bihan, Hervé; … - 2022 - This version: April 2021
We address the question in this paper's title using an estimated New Keynesian DSGE model of the euro area with trend … inflation, imperfect indexation, and a lower bound on the nominal interest rate. In this setup, a decrease in the steady … the inflation target of eighttenths the size of the drop in the real natural rate of interest is warranted. Absent an …