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 …

We study how changes in the value of the steady-state real interest rate affect the optimal inflation target, both in …-for-one: increases in the optimal inflation rate are generally lower than declines in the steady state real interest rate. Our approach … allows us not only to assess the uncertainty surrounding the optimal inflation target, but also to determine the latter while …

inflation, imperfect indexation, and a lower bound on the nominal interest rate. In this setup, a decrease in the steady … the inflation target of eighttenths the size of the drop in the real natural rate of interest is warranted. Absent an … increase in the inflation target, and assuming the effective lower bound prevents the European Central Bank from implementing …

We study how changes in the steady-state real interest rate affect the optimal inflation target in a New Keynesian DSGE … model with trend inflation and a lower bound on the nominal interest rate. In this setup, a lower steady-state real interest … rate increases the probability of hitting the lower bound. That effect can be counteracted by an increase in the inflation …

perspective on the linkages among monetary policy, inflation, and the business cycle. It is argued that the adoption of an …

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 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 …