Ascari, Guido; Ropele, Tiziano - Dipartimento di Economia, Metodi Quantitativi e … - 2005
In this paper, we show that low trend inflation strongly affects the dynamics of a standard Neo-keynesian model where monetary policy is described by a standard Taylor rule. In particular, we show that trend inflation: (i) enlarges the indeterminacy region in the parameter space, substantially...