shortfalls in inflation and output relative to exogenous trends, and the policy rate is kept at the ELB until the joint shortfall … is made up. Bernanke's second proposal adds only the cumulative inflation shortfall since the beginning of an ELB episode … directly to an otherwise standard Taylor rule. This cumulative shortfall in inflation from the 2 percent objective can be …

price level. The analysis compares the properties of optimal policy in regimes ranging from pure inflation targeting (IT …), to a form of weighted-average inflation targeting (WAIT), to pure price level targeting (PLT). Strategies such as WAIT …

This paper documents two facts about countries with floating exchange rates where monetary policy controls inflation … horizon. Second, the real exchange rate is virtually uncorrelated with future inflation rates both in the short run and in the …