Policy options for stimulating real activity are limited once short-term interest rates have been driven to zero. Monetary policy makers face the difficult challenge of preventing or reversing declines in near-term inflation expectations while preserving confidence in the central bank's...

Front Cover -- Book Title -- Copyright -- Contents -- Preface -- Introduction -- Part I - Taylor's Approach to Monetary Theory and Policy -- 1. Monetary Policy Rules: From Adam Smith to John Taylor - Pier Francesco Asso, Robert Leeson -- 2. The Taylor Rule and the Practice of Central Banking -...

"In economies with sticky-information wage setting, policymakers legitimately give attention to output stabilization as well as price-level or inflation stabilization. Consistent with Kydland and Prescott (1990), trend deviations in prices are predicted to be negatively correlated with trend...