This paper draws from Japan's recent monetary experiment to examine the effects of an increase in the inflation target … identified inflation target shock. We apply these findings to calibrate the effect of a shock to the inflation target in a new …-Keynesian DSGE model of the Japanese economy. We argue that imperfect observability of the inflation target and a separate exchange …

This paper investigates the macroeconomic risks associated with undesirably low inflation using a medium-sized New … Keynesian model. We consider different causes of persistently low inflation, including a downward shift in long-run inflation … persistently low inflation depend crucially on its underlying cause, as well as on the extent to which monetary policy is …

transfer of wealth from savers to borrowers, reducing precautionary motives and stimulating current demand and inflation …. Second, higher initial inflation lowers the path of the real rate increasing the wealth of borrowers, who have a higher …-MPC borrowing-constrained agents, further increasing aggregate consumption and inflation. These channels amplify each other in a …