perspective on the linkages among monetary policy, inflation, and the business cycle. It is argued that the adoption of an …

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 …

each country faces a short run tradeoff between output and inflation. The model is sufficiently tractable to solve … response to domestic inflation, under cooperation they should respond to foreign inflation as well. In either scenario …

. 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 …