negatively correlated with inflation and inflation variance across countries. But the cross-country approach has been criticised … economy, higher output and somewhat lower inflation. We also investigate the interaction between the central bank and the …

inflation bias as monetary policy tries to exploit nominal wage contracts to address labour-market distortions Although an … inflation target eliminates this inflation bias, it creates a conflict between monetary policy and discretionary fiscal policy …

When inflation picks up, central banks are most concerned that the de-anchoring of inflation expectations and the … ignition of wage-price spirals will trigger inflation dynamic instability. However, such scenarios do not materialize in the … updated according to the actual inflation process, with indexed wages, and persistent inflation shocks. In these cases, a more …

The resurgence of inflation since the late 2021 is now accompanied by a reversal of prospects of growth, reviving fears … prominent role is played by the fall of households' purchasing power, and hence consumption, owing to the inflation shock visà … inflation surprises, independent of restrictive monetary policy, is not present in the standard New Keynesian models for …

, thereby controlling inflation expectations, it can improve welfare by stabilizing short-run aggregate shocks. The optimal …