Billi, Roberto M. - In: American Economic Journal: Macroeconomics 3 (2011) 3, pp. 29-52
This paper studies the optimal long-run inflation rate (OIR) in a small New Keynesian model, where the only policy instrument is a short-term nominal interest rate that may occasionally run against a zero lower bound (ZLB). The model allows for worst-case scenarios of misspecification. The...