experiment of the past decade, stemming from a belief of the government that higher interest rates cause higher inflation … eventually a negative coefficient on inflation in the policy rule. In such an environment, was the exchange rate still a random … walk? Was inflation anchored? Does the “standard model” suffice to explain the broad contours of macroeconomic outcomes in …

The paper analyses the reasons for Japan’s persistently low inflation since the bursting of the Japanese bubble economy … (low inflation conundrum). It is shown that Japan experienced a structural break from a high-growth period with relatively … high inflation to a low-growth period with exceptionally low inflation since the early 1990s. We show based on a stylized …

1979. Even if monetary policy is found to react only mildly to inflation pre-Volcker, the substantial degrees of bounded …

How should central banks optimally aggregate sectoral inflation rates in the presence of imperfect labor mobility … mobility, ceteris paribus, increases the optimal weight on inflation in a sector that would otherwise receive a lower weight … computing sectoral inflation weights based solely on sector size, and unveil a significant role for the degree of sectoral labor …

a fixed policy rate. This policy induces similar welfare losses relative to dual-instrument policy as inflation …

combine low inflation targets and high levels of wealth inequality …

Moments (TVP-GMM) framework. Using monthly data until December 2022 for five inflation targeting countries (the UK, Canada …, Switzerland), we find that monetary policy has become more averse to inflation and more responsive to the output gap in both sets … of countries over time. In particular, there has been a clear shift in inflation targeting countries towards a more …

restriction that economic theory is not violated, while the shocks are still recursively identified. We solve this optimization …, generates theory-consistent impulse responses, and is as close as possible to the recursive scheme …