Modifying the objective function of a discretionary central bank to include an interest-rate smoothing objective … increases the welfare of an economy where large contractionary shocks occasionally force the central bank to lower the policy … rate to its effective lower bound. The central bank with an interest-rate smoothing objective credibly keeps the policy …

Assigning a discretionary central bank a mandate to stabilize an average inflation rate—rather than a period …

the central bank to compensate for the reduced effect of a future rate cut by keeping the policy rate at the ELB for longer …

improves the inflation-output tradeoff for a discretionary central bank. However, in the aftermath of a deep recession with a … binding ZLB, a central bank with an objective for output growth stabilization aims to engineer a more gradual increase in …