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 …

Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations …. -- optimal monetary policy ; inflation targeting ; unemployment ; Phillips curve ; nominal inertia ; monetary policy …

This paper studies the challenge that increasing the inflation target poses to equilibrium determinacy in a medium …-sized New Keynesian model without indexation fitted to the Great Moderation era. For moderate targets of the inflation rate …

How does competition affect information acquisition of firms and thus the response of inflation and output to monetary … uncertainty about inflation as a non-targeted moment. …

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 …

contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high … incomes experience guilt. The former seek to raise their income, and latter seek to reduce it. The greater the inflation rate …, a rise in the inflation rate leads workers to supply more labor over the contract period, generating a significant …