approach gradually a new steady state with positive average inflation. Around that steady state, the optimal policy implies … well defined (second-best) paths for inflation and output in response to shocks to the natural rate. Under plausible …

for the unemployment-inflation trade- off and for the conduct of monetary policy. We proceed in two steps. We first leave … firms. We derive the relation between inflation and unemployment and discuss how it is influenced by the presence of labor … market frictions and real wage rigidities. We show the nature of the tradeoff between inflation and unemployment …

for the mild effects on inflation and economic activity of the recent increase in the price of oil: (a) good luck (i …

. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the … gains from making credible commitments to fight inflation. In contrast to conventional wisdom, we show that gains from …

. Among other things, we show that the optimal policy implicitly incorporates inflation targeting. We also characterize the … gains from making credible commitments to fight inflation. In contrast to conventional wisdom, we show that gains from …

reduced to a tractable canonical system in domestic inflation and the output gap. We employ this framework to analyze the … macroeconomic implications of three alternative rule-based policy regimes for the small open economy: domestic inflation and CPI … exchange rate volatility that they entail. We also discuss a special case for which domestic inflation targeting constitutes …

reduced to simple representation in domestic inflation and the output gap. We use the resulting framework to analyze the … macroeconomic implications of three alternative rule-based policy regimes for the small open economy: domestic inflation and CPI … exchange rate volatility that they entail. We also discuss a special case for which domestic inflation targeting constitutes …

and its implications for US output, hours and inflation. Second we evaluate the extent to which those responses can be … the Fed’s policy tended to over stabilize output at the cost of generating excessive inflation volatility. Our evidence …

reduced to a tractable canonical system in domestic inflation and the output gap. We employ this framework to analyse the … macroeconomic implications of three alternative monetary policy regimes for the small open economy: domestic inflation targeting … exchange rate volatility that they entail. We also discuss a special case for which domestic inflation targeting constitutes …