Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations. …

indexation to past inflation to vary according to the monetary policy regime. We find that the extent of wage indexation is … significantly lower in an inflation targeting regime, in contrast to monetary targeting, exchange rate targeting and policy regimes …

constant inflation. This change has been more pronounced than elsewhere. We argue that this stems from the immigration boom in … 1995 would have led to an annual increase in inflation of 2.5 percentage points if it had not been largely offset by …

It is an open question whether and how indexed wage contracts reduce welfare or raise average inflation. This paper … analyzes the impact of indexed wage contracts on inflation and social welfare in a Barro–Gordon model with discretionary … monetary policy by endogenizing social costs of indexation. Main results are: Wage indexation reduces the inflation bias but …

, we follow Roberts (1997) and Adam and Padula (2003) and use direct measures of inflation expectations. The data source is … the Ifo World Economic Survey, which quarterly polls economic experts about their expected future development of inflation … turns out to more relevant for most countries in our sample. (ii) The use of survey data for inflation expectations yields a …

In a standard New Keynesian model, a myopic central bank concerned with stabilizing inflation and changes in the output … stabilizing output gap changes, the central bank imparts inertia into output and inflation that is absent under pure discretion … social outcomes if it focuses on inflation and changes in the output gap than are achieved under inflation targeting. …

Many inflation targeting central banks are facing calls to expand their list of policy goals. I discuss how recent …

, and Slovakia) using GARCH and TARCH models between 1999 and 2006. Despite these countries adopted inflation targeting …

stability. To contain domestic inflation these central banks absorb rather then provide liquidity in their regular monetary … policy operations. Based on an augmented Barro-Gordon framework we show that inflation targeting within an environment of … implementing sterilization costs into the central bank’s objective function the inflation bias increases. …