optimal but ’simple’ forecast functions, describes subjects’ inflation expectations surprisingly well and explains the …This paper presents experimental evidence from a monetary sticky price economy in which output and inflation depend on … expected future inflation. With rational inflation expectations, the economy does not generate persistent deviations of output …

perceived inflation persistence by the private sector. Such a sophisticated policy reduces inflation persistence and inflation … volatility at little cost in terms of output gap volatility. Persistent responses to cost-push shocks and stability of inflation … play is very different. In the case of commitment it relies on expectations of future policy actions affecting inflation …

This paper analyzes monetary policy in a model with a potential unanchoring of inflation expectations. The degree of … unanchoring is given by how sensitively the public’s long-run inflation expectations respond to inflation surprises. I find that … inflation fluctuations when expectations are well-anchored. Furthermore, I estimate the model-implied relationship that …

improves the out-of-sample forecast accuracy of the model. Furthermore, we evaluate the case for introducing a discount factor …

The paper studies how a prolonged period of subdued price developments may induce a de-anchoring of inflation … properties of inflation expectations in the euro area. Our results also suggest that monetary policy may lose effectiveness if …

-time estimates to check the stability of the estimates to GDP revisions. We finally run a forecasting experiment to evaluate the … predictive power of the output gap for inflation in the euro area. We find evidence of changes in trend growth around the … estimates in real time. Our measures help forecasting inflation over most of our evaluation sample (2001-2010) but fail …

, subsequently, we didn't see the inflation they predicted. We show that these puzzles disappear in a Vector Autoregressive model … much of the inflation dynamics in the 2012-2014 euro area missing inflation episode. Consequently, economists and models … that excessively focused on the global nature of inflation were liable to miss the contribution of deflationary domestic …

affected temporarily. Inflation forecasts made by Eurosystem/ECB staff perform similarly or slightly better than those from our …