. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the … gains from making a credible commitment to fight inflation. In contrast to conventional wisdom, we show that gains from …

A relation between inflation and the path of average marginal cost (often measured by unit labor cost) implied by the … is shown to again take the standard "new-Keynesian" form, but with an elasticity of inflation with respect to real …

response of prices is pinned down by three parameters: the precision of available information about the nominal shock; the …-order beliefs, or the agents' forecasts of inflation. We highlight the distinct role of higher-order beliefs with three extensions …

This paper examines the shift in the relation between the inflation rate and the rate of growth of real output which … possible lines of explanation: a) the new classical view of the output-inflation tradeoff, initially specified by Lucas;b) the … effect of supply-side shocks, such as energy prices; c) the effect of inflation variability on the natural rate of real …

framework that allowed the high inflation of the 1970s. Second, I consider whether models of inflation determination with no … monetary policy strategy of the empirical evidence for a long-run relationship between money growth and inflation. And fourth …, I consider reasons why a monetary policy strategy based solely on short-run inflation forecasts derived from a Phillips …

Most central banks perceive a trade-off between stabilizing inflation and stabilizing the gap between output and … inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new … stabilizing inflation and stabilizing the welfare-relevant output gap. We show that not only does the extended model have more …

people observe low inflation, they raise the possibility that the policymaker is committed to low inflation (type 1). This … equilibrium the policymaker of type 1 delivers surprisingly low inflation -- with corresponding costs to the economy -- over an … extended interval. The type 2 person mimics this outcome for awhile, but shift seventually to high inflation. This high …