interpreted, first and foremost, as a commitment device. In our setting, a monetary target helps anchoring inflation and inflation … well as a strong response to deviations of inflation from target and to the activity growth gap. In contrast, the response …

target inflation rates as low as 2 percent. However, the effects of the constraint are non-linear with respect to the … inflation target and produce a quantitatively significant deterioration of the performance of the economy with targets between 0 … and 1 percent. The variability of output increases significantly and that of inflation also rises somewhat. Also, we show …

monetary targets, the SNB was able to reduce the inflation trend to low levels. However, it was less successful in preserving …-emptive policy stance. At the end of 1999, the SNB abandoned monetary targeting in favour of an approach based on inflation forecasts …

supply disturbances, the stabilisation costs of renouncing monetary autonomy diminish with a flatter output-inflation …

stochastic menu costs are the only distortions. We show analytically that it is optimal to commit to zero inflation in the long …

transmission mechanism in the euro area. Second, we do not find any significant, direct impact of stock prices on inflation. These … of their direct impact on inflation. Third, permanent productivity shocks are the driving force of the stock market in …