solutions such as the conservative central banker and optimal inflation contracts. Our theoretical model also shows how an … inflation targeting range should be set and how it should respond to changes in the nature of shocks to the economy …

Reserve and commercial inflation forecasts. We demonstrate that the Federal Reserve has considerable information about … inflation beyond what is known to commercial forecasters. We also provide evidence that monetary policy actions provide signals …

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 …

sustained inflation are small relative to the costs of unemployment. If a temporary reduction in unemployment causes a permanent … increase in inflation, the present value of the resulting future welfare costs may well exceed the temporary short-run gain …. Previous analyses have underestimated the cost of a permanent increase in the inflation rate because they have ignored the …

common monetary authority chooses inflation for the union, also without commitment. We first describe the existence of a … wisdom that all countries should prefer a union with low-debt members, as such a union can credibly deliver low inflation …

-pricing theory, is calibrated to analyze the effects of monetary policy and financial innovation. We show that inflation can raise … output, employment and investment, plus improve housing and stock markets. For the baseline calibration, optimal inflation is …

In closed or open economy models with complete markets, targeting core inflation enables monetary policy to maximize … is high. We develop an open economy model with incomplete financial markets to show that headline inflation targeting … headline inflation, assigns zero weight to import prices …