of monetary policy. We use a stylized macro model of Howitt (1992) to investigate inflation dynamics under alternative … interest rate in response to inflation. In particular, if the monetary authority only responds weakly to inflation, a … cumulative process with rising inflation is likely. On the other hand, a Taylor interest rate rule that sets the interest rate …

inflation volatility. Contrary to comparable models based on full rationality, the behavioral model predicts that inflation … volatility can be lowered if the central bank reacts to the output gap in addition to inflation. We test the opposing theoretical … reacting to the output gap in addition to inflation can indeed lower inflation volatility. …

predicts that inflation volatility can be lowered if the central bank reacts to the output gap in addition to inflation. We … results support the claim that output stabilization can lead to less volatile inflation …

of monetary policy. We use a simple frictionless DSGE model to investigate inflation dynamics under alternative interest … the monetary authority sets the nominal interest rate in response to inflation. In particular, if the monetary authority … only responds weakly to inflation, a cumulative process with rising inflation is likely. On the other hand, a Taylor …

monetary policy, we find that an interest rate rule that reacts more than point for point to inflation has some stabilizing … effects on inflation in our experimental economies, although convergence can be slow in presence of evolutionary learning …