. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the … gains from making a credible commitment to fight inflation. In contrast to conventional wisdom, we show that gains from …

yields on long maturity inflation - indexed bonds. This relationship can be interpreted as defining the fair value of the … exchange rate that will prevail in any model or real world economy in which inflation indexed bonds are traded. An advantage of … take our theory to a dataset spanning the period January 2001 - February 2011 and study a daily , real time decompositions …

This paper provides an explanation for the run-up of U.S. inflation in the 1960s and 1970s and the sharp disinflation … by low inflation. However, prolonged episodes of high inflation ending with rapid disinflations can occur when … policymakers underestimate both the natural rate of unemployment and the persistence of inflation in the Phillips curve. I estimate …

carefully coordinated features of a more comprehensive income tax, including the indexation of interest, depreciation, and …-occupied housing. It finds that the current system is characterized by effective tax rates that increase with inflation for some assets … and decrease with inflation for other assets. Overall rates fall with inflation, and the corporate tax is completely …

Much of the opposition to indexation as a means of adapting to on going inflation arises from the view that indexation … association between indexation and inflation is in large part a consequence of the monetary and fiscal policies being followed by … deficits are in part financed through the printing of money. It is shown that all aspects of indexing -- wage indexation, bond …

linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due … interest-rate rules whereby the central bank responds to a measure of past inflation. The consensus view that has emerged is … inflation are likely to ensure global stability provided that the coefficient on lagged interest rates is greater than unity …

We propose a continuous time model of nominal debt and investigate the role of inflation credibility in the potential … for self-fulfilling debt crises. Inflation is costly, but reduces the real value of outstanding debt without the full … punishment of default. With high inflation credibility, which can be interpreted as joining a monetary union or issuing foreign …

inflation contribute to stabilizing economic activity?"--is, for the most part, yes …

inflation and activity. If policy makers are guided by the welfare criterion of the representative household, globalization … forces also lead monetary policy to be more aggressive with regard to inflation fluctuations but, at the same time, more …