This paper shows that it is possible to analyze equilibrium inflation determination without any reference to either … become negligible. Inflation in the cashless limit is shown to be a function of the gap between the natural rate' of interest …-rate rule indicating the tightness of monetary policy. Inflation can be completely stabilized, in principle, by adjusting the …

deviations of inflation and an output gap measure from their optimal values (zero). However, those derivations rely on an … monopolistically-competitive price-setters, so that the steady state under a zero-inflation policy involves an efficient level of …We again obtain a welfare-theoretic loss function that involves both inflation and an appropriately defined output gap …

, except in the case of a certain class of policies (called 'Ricardian' policies). The role of fiscal developments in inflation …

optimizing models with nominal price rigidities. Inflation stabilization enhances welfare, insofar as variable inflation results … sense in which inflation variability matters for welfare, however, depends upon the details of price-setting behavior …

even make possible complete stabilization of both aggregate output and inflation under certain circumstances, despite the …

real interest rates in response to increases in inflation or real activity resulting from the fiscal stimulus. A large …

minimizing a loss function with three terms, involving measures of the variability of wage inflation, price inflation and the …