Saez, Emmanuel; Michaillat, Pascal - National Bureau of Economic Research (NBER) - 2014
In recent decades, advanced economies have experienced low and stable inflation and long periods of liquidity trap. We … which inflation is fixed and not determined by a forward-looking Phillips curve. With wealth in the utility, the Euler … equation is modified and we can obtain steady-state equilibria with a liquidity trap, positive inflation, and labor market …