Amano, Robert; Ambler, Steve; Shukayev, Malik - In: Canadian Journal of Economics 45 (2012) 3, pp. 1023-1036
In both the canonical and many extended versions of the New Keynesian model, optimal monetary policy under commitment implies price-level stationarity as long as expectations are rational. We show that this is no longer the case if the central bank and private agents make decisions before...