stronger bargaining position when they try to prevent a cut in money wages. If inflation is so low that some money wages have … to be cut, workers stronger bargaining position requires higher unemployment in equilibrium. However, inflation is more … stable when money wage rigidity binds, providing an incentive for monetary policy makers to choose a low target for inflation …

-term nominal bonds and costly inflation. Our model features two transmission channels of monetary policy: a Fisher channel, arising … from the impact of inflation on the initial price of long-term bonds, and a liquidity channel. The Fisher channel gives the … prices and thus relax borrowing limits. The result is optimal inflation front-loading. Numerically, we find that optimal …

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 …

current operating procedures and make monetary policies more effective in fighting inflation. …

found to help rationalizing the hump-shaped response of inflation, without resorting to the counterfactual assumption of …

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 …