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 …

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 …

January 1993 to December 2020 for five inflation-targeting countries (the UK, Canada, Australia, New Zealand and Sweden) and … speed is twice as fast when deviations are small and the credibility of the central bank is higher. Third, inflation …

In a standard New Keynesian model, a myopic central bank concerned with stabilizing inflation and changes in the output … stabilizing output gap changes, the central bank imparts inertia into output and inflation that is absent under pure discretion … social outcomes if it focuses on inflation and changes in the output gap than are achieved under inflation targeting. …

This paper analyses the impact of asymmetric preferences with respect to inflation and output by policymakers on … for low inflation. Using data for four G7 economies, the paper shows that, except for Germany, nonlinear and asymmetric … monetary authority develops a greater precautionary demand for output expansions than for low inflation. This may generate a …

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

inflation at near-zero nominal interest rates. We show how (conventional and unconventional) monetary policy shocks enlarge the … ability to explain the facts, such that the theory supports both a negative and a positive response of inflation. Central to …