Most macroeconomic models for monetary policy analysis are approximated around a zero inflation steady state, but most … central banks target an inflation rate of about 2 percent. Many economists have recently proposed even higher inflation … conduct of monetary policy should be analyzed by appropriately accounting for the positive trend inflation targeted by …

of underlying inflation imply a low degree of persistence. Furthermore, once explicit microfoundations are taken into … average inflation …

We show that low trend inflation strongly affects the dynamics of a standard Neo-Keynesian model where monetary policy … is described by a standard Taylor rule. Moreover, trend inflation enlarges the indeterminacy region in the parameter … cannot disregard average inflation in both theoretical and empirical analysis. …

particularly focus on the implications for inflation dynamics. We will show how considering models with time-varying trend … inflation overcomes the initial difficulties of the New Keynesian Phillips Curve to match the empirical persistence of the time … series for inflation. Inflation is highly persistent, but much of that persistence is due to shifts in trend inflation. …

This paper studies the challenge that increasing the inflation target poses to equilibrium determinacy in a medium …-sized New Keynesian model without indexation fitted to the Great Moderation era. For moderate targets of the inflation rate …

central banks target inflation at a rate of about 2 percent. Many economists have recently proposed even higher inflation … importance of appropriately accounting for a low, positive trend inflation rate for the conduct of monetary policy. We first … review empirical research on the evolution and dynamics of U.S. trend inflation, as well as some proposed new measures to …

model indexation regulates the sources of inflation persistence. When indexation is zero, the inflation gap is purely … forward- looking and inflation persistence depends only on the level of trend inflation, while full indexation makes the … inflation gap persistent and it eliminates the effects of trend inflation. We show that in the former case the optimal policy is …

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 …

trend inflation? We find that passive monetary detours are no longer possible when trend inflation is high, whatever fiscal …

This paper studies the challenge that increasing the inflation target poses to equilibrium determinacy in a medium …-sized New Keynesian model without indexation fitted to the Great Moderation era. For moderate targets of the inflation rate …