-term nominal yields over long horizons. The remaining driver of long-term yields are changes in inflation expectations induced by … conventional, autoregressive shocks. Long-term inflation expectations implied by our model are in line with those based on survey …

helps to explain the sluggishness of inflation and the persistence of output after a monetary policy shock. The ability of …In order to explain the joint fluctuations of output, inflation and the labor market, this paper first develops a … general equilibrium model that integrates a theory of equilibrium unemployment into a monetary model with nominal price …

-term inflation volatility in response to exogenous shocks can be optimal; the optimal response to adverse financial shocks is to … lower interest rates, if not at the zero bound, and to engineer a short period of controlled inflation; the Taylor rule may …

We develop a theoretical model that features a business cycle-dependent relation between out- put, price inflation and … inflation expectations, augmenting the model by Svensson (1997) with a nonlinear Phillips curve that reflects the rationale … underlying the capacity constraint theory (Macklem (1997)). The theoretical model motivates our empirical assessment for the euro …