We study the relation between inflation and real activity over the business cycle. We employ a Trend-Cycle VAR model to … control for low-frequency movements in inflation, unemployment, and growth that are pervasive in the post-WWII period. We show … that cyclical fluctuations of inflation are related to cyclical movements in real activity and unemployment, in line with …

adamant about preventing a rise in inflation? The large fiscal imbalance brings about inflationary pressures, triggering a … spiral of higher inflation, output contraction, and further debt accumulation. A coordinated commitment to inflate away the …

Since the 2001 recession, average core inflation has been below the Federal Reserve's 2% target. This deflationary bias … corrects the bias and brings inflation back on target. Adopting this asymmetric rule improves welfare and reduces the risk of …

Since the 2001 recession, average core inflation has been below the Federal Reserve’s 2% target. This deflationary bias …-target inflation corrects the bias, improves welfare, and reduces the risk of deflationary spirals - a pathological situation in which … inflation keeps falling indefinitely. This approach does not entail any history dependence or commitment to overshoot the …

announcements by the fiscal and monetary authorities can lead to high inflation and large output losses. The policy trade-off can be …