helps explain the well known puzzle that fundamental variables such as relative money supplies, outputs, inflation and …

inflation targeting and aggressive use of forward guidance. In contrast to the predictions of conventional macroeconomic theory … inflation, which is consistent with the evidence. As Kuroda (2016) emphasizes, for an economy without a history of inflation … being anchored by a target, individuals need direct evidence that the central bank is capable of moving inflation to target …

A standard statistical perspective on the U.S. Great Inflation is that it involves an increase in the stochastic trend … rate of inflation, defined as the long-term forecast of inflation at each point in time. That perspective receives support …, and statistical studies of U.S. inflation dynamics. We show that a textbook macroeconomic model delivers such a stochastic …

approach gradually a new steady state with positive average inflation. Around that steady state, the optimal policy implies … well defined (second-best) paths for inflation and output in response to shocks to the natural rate. Under plausible …

instrumental variables that are assumed to be uncorrelated with unobservables. We instead assume (i) the correlation between the … instrument and the error term has the same sign as the correlation between the endogenous regressor and the error term, and (ii …

This paper investigates whether permanent monetary tightenings increase inflation in the short run. It estimates, using … increases in the nominal interest-rate lead, in accordance with conventional wisdom, to a decrease in inflation and output and … an immediate increase in inflation and output and a decline in real rates. Permanent monetary shocks explain more than 40 …