chooses to stabilize wage inflation at the expense of price inflation, a policy resembling the policy that is optimal in the …

unemployment as well as about the effect of economic activity on inflation. At the same time, a prolonged period of below …-target inflation has raised concerns about the unanchoring of inflation expectations at levels below the Federal Open Market Committee …’s inflation target. In addition, a low natural rate of interest increases the probability of hitting the effective lower bound …

maximization includes output stabilization, as well as inflation and output gap stabilization. We find that the variance of output … this rule, the optimal responses to inflation and the lagged interest rate are both declining in the size of the habit …

-neutrality. While menu cost models uniformly predict that price change skewness and dispersion fall with inflation, in the Calvo model … both rise. However, CPI price data from the late 1970's onwards shows that skewness does not fall with inflation, while …

1980s not only conquered the Great Inflation, but also buried the Phillips curve itself. This paper provides an alternative … power of trade unions. We show that a nearly 90 percent reduction in inflation volatility is possible even without any …