This paper shows that the conditions under which inflation-targeting interest rate rules lead to equilibrium uniqueness … interest rates in response to inflation, the real interest rate changes. The overall effect of this change on aggregate demand …

situation poses to price stability. We propose to regard the central banker as a risk manager who aims to contain inflation … forecast the risks of worldwide deflation for horizons of up to two years. Although recently fears of worldwide deflation have … increased, we find that, as of September 2002, with the exception of Japan there is no evidence of substantial deflation risks …

inflation in the enlarged euro area, but only to inflation redistribution across countries if continuity of the monetary policy … framework is preserved. In the short term, unanticipated shocks to the real exchange rate may instead affect aggregate inflation … if member countries' economic structure differs. When comparing welfare, inflation and output stabilisation, we find that …

of setting inflation at the desired level may be offset by a positive impact on potential output. We show that for entry …

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

simple and familiar one. The contraction phase was primarily a consequence of a shock that induced a shift away from … slowness of the recovery from the Depression was due to a shock that increased the market power of workers. We identify a …

is derived from policy-makers’ preferences about inflation outcomes, we first show that downside risks to price stability … in the risk balance throughout our evaluation period because of the implied amplification of deflation risks. We then … future inflation can provide insurance against the materialisation of such upside risks. JEL Classification: E31, E37, E52, E …