Since 2000 U.S. inflation has remained both below target and silent to domestic slack and monetary interventions. A … inflation. The trend analysis shows that, starting from the '90s, despite very well-anchored expectations, slow-moving imported … "cost-push" factors induced deflationary pressure keeping trend inflation below target. The cycle block provides evidence in …

In the monetary policy literature it is commonly assumed that trend inflation is zero, despite overwhelming evidence … that zero inflation is neither empirically relevant nor a practical objective for central bank policy. We therefore extend … the standard New Keynesian model to allow for positive trend inflation, showing that even low trend inflation has strong …

Since 2000 U.S. inflation has remained both below target and silent to domestic slack. A trend-cycle BVAR decomposition … deflationary pressure keeping trend inflation below target. The cycle block provides evidence of a flattening of the Phillips curve …, mainly attributable to a weaker wage pass-through. The business cycle behaviour of inflation is determined by a shock …

Even low levels of trend inflation substantially affect the dynamics of a basic new Keynesian DSGE model when monetary … policy is conducted by a contemporaneous Taylor rule. Positive trend inflation shrinks the determinacy region. Neither the … Taylor principle, which requires the inflation coefficient to be greater than one, nor the generalized Taylor principle …

We combine an estimated monetary policy rule featuring time-varying trend inflation and stochastic coefficients with a … medium scale New Keynesian framework calibrated on the U.S. economy. We find the impact of variations in trend inflation on … counterfactual exercises suggest that the change in the Federal Reserve's policy response to inflation is likely to have been the …