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 …

adequate stimulus at the ELB while avoiding sizable overshoots of inflation and output …

Speed limit policy, a monetary policy strategy that focuses on stabilizing inflation and the change in the output gap …, consistently delivers better welfare outcomes than flexible inflation targeting or flexible price level targeting in empirical New … inflation targeting strategy, the discretionary speed limit policy performs better for most empirically plausible model …

inflation and deflationary biases in inflation expectations. In a model with an occasionally binding zero-lower-bound constraint …, we show that an inflation bias as well as a deflationary bias exist as a steady-state outcome. We assess the predictions … of this model using unique individual-level inflation expectations data across nine countries that allow for a direct …

policy rate will become constrained in the future lowers today's inflation by creating tail risk in future inflation and thus … reducing expected inflation. In an empirically rich model calibrated to match key features of the U.S. economy, we find that … the tail risk induced by the ELB causes inflation to undershoot the target rate of 2 percent by as much as 50 basis points …

In expectations-driven liquidity traps, a higher inflation target is associated with lower inflation and consumption … optimal inflation target. Using a calibrated New Keynesian model with an effective lower bound (ELB) constraint on nominal … optimal inflation target nontrivially. Our analysis provides a reason to be cautious about the argument that central banks …