We study how changes in the value of the steady-state real interest rate affect the optimal inflation target, both in …-for-one: increases in the optimal inflation rate are generally lower than declines in the steady-state real interest rate. Our approach … allows us not only to assess the uncertainty surrounding the optimal inflation target, but also to determine the latter while …

determine inflation in this regime, so I base the analysis on the fiscal theory of the price level. I find that monetary policy … can peg the nominal rate, and determine expected inflation. With sticky prices, monetary policy can also affect real … interest rates and output, though higher interest rates raise output and then inflation. The conventional sign requires a …

This paper investigates the hypothesis that surprise changes in the money supply and anticipated inflation (the Mundell … surprises and expected real interest or an inverse relationship between anticipated inflation and expected real interest. These …

standard New-Keynesian model, and may even inflate the equity premium. Second, asset-price movements improve the inflation …-output trade-off so that average output can rise without increasing much average inflation. Finally, a strict inflation …-targeting policy may result in lower average welfare than a more flexible inflation-targeting policy, which instead increases the …

We argue that there are sound theoretical reasons for believing that an inflation targeting central bank might improve … macroeconomic performance by reacting to asset price misalignments over and above the deviation of, say, a two-year ahead inflation … emphasize that our proposal is wholly consistent with the remit of most inflation-targeting central banks, as we are …

that modest alterations to monetary policy have vast consequences is inconsistent with theory and not supported by evidence …