Standard New Keynesian (NK) models feature an optimal inflation target well below two percent, limited welfare losses …-run Phillips curve between inflation and unemployment and a trade-off between price distortions and output hysteresis that change … the welfare-maximizing inflation level. For a plausible set of parameters, the optimal inflation target is in excess of …

deviate from the strict inflation targeting since the policy maker faces a typical unemployment/inflation trade-off. In this … context and unlike a standard New Keynesian model stabilizing inflation is not sufficient to stabilize the marginal cost … matches. Hence optimal monetary policy features unemployment targeting along with inflation targeting …

This paper analyzes monetary policy in a model with a potential unanchoring of inflation expectations. The degree of … unanchoring is given by how sensitively the public's long-run inflation expectations respond to inflation surprises. I find that … inflation fluctuations when expectations are well-anchored. Furthermore, I estimate the model-implied relationship that …

equilibrium interest rate (r*), trend inflation (π*), and term premia. Similar to Bauer and Rudebusch (2020, AER), π* and r …