rules. Accordingly, we augment a standard inflation targeting model in which a forward-looking version of the Taylor rule …

models consistent with macroeconomic data, especially persistence in inflation, and ii) the wealth of newly available … microeconomic data on price changing behaviour from the ECB’s Inflation Persistence Network, alongside earlier firm surveys for … “stickier†sectors. When calibrated to micro data the model predicts inflation persistence comparable to that in …

deviations of inflation from target, but not to monetary growth. This result is at odds with the Bundesbank´s claim that it … Bundesbank took its monetary targets seriously, but also responded to deviations of expected inflation and output growth from …

monetary policy in particular. The form in current widespread use includes both forward looking expected inflation and lagged … inflation. The presence of lagged inflation is necessary to generate predicted inflation persistence to match actual persistence … convincingly predict inflation persistence …

. Under discretionary monetary policy the size of the inflation bias depends on the fiscal policy regime. Using the timeless … alternative fiscal policy rules, and inflation and output persistence reflects the economic data. With the deficit rules, the …