patterns in economic activity and inflation following oil price shocks in the euro area. In the 'normal regime', oil price … shocks are followed by sizeable and sustained macroeconomic fluctuations, with inflation and economic activity moving in the … same direction as the oil price. The responses of inflation expectations and wage growth point to second-round effects as a …

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 …

. Raising the inflation target or appointing an inflation-conservative central banker mitigates the inflation shortfall away …