A relation between inflation and the path of average marginal cost (often measured by unit labor cost) implied by the … is shown to again take the standard "new-Keynesian" form, but with an elasticity of inflation with respect to real …

appointment of Volcker marked a change in the conduct of monetary policy, but inflation dropped only when fiscal policy … accommodated this change two years later. In fact, a disinflationary attempt of the monetary authority leads to more inflation if … been confident about the switch, the Great Inflation would not have occurred and debt would have been higher. This is …

traditional inflation bias equilibrium, in which price-setters are optimistic, rationally expecting small adjustments by other … firms. But there is another steady-state equilibrium in which price setters are pessimistic and inflation is much higher … with equilibrium selection each period determined by an i.i.d. sunspot, there is greater inflation bias on average than if …

This paper presents a prototype model for development of the fiscal theory of the price level.' In this simple setting …, the fiscal theory's distinctiveness relies upon adoption of a bubble solution, rather than the rational …

framework that allowed the high inflation of the 1970s. Second, I consider whether models of inflation determination with no … monetary policy strategy of the empirical evidence for a long-run relationship between money growth and inflation. And fourth …, I consider reasons why a monetary policy strategy based solely on short-run inflation forecasts derived from a Phillips …

and the inflation rate without error, then it is typically optimal to respond infinitely strongly to observed deviations … from the central bank's targets. If it observes inflation and the output gap with error, the central bank will temper its … terms of estimated output and inflation then it is optimal to respond infinitely strongly to estimated deviations from the …

We study the effects of positive steady-state inflation in New Keynesian models subject to the zero bound on interest … rates. We derive the utility-based welfare loss function taking into account the effects of positive steady-state inflation … and show that steady-state inflation affects welfare through three distinct channels: steady-state effects, the magnitude …