Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations. …

what I call a micro Phillips curve, i.e. a product-specific relation between inflation and economic activity conditional on … inflation expectations. I find two opposing effects of competition on the slope of the micro Phillips curve. On the one hand … weak competition. In line with the theory, prices of products, that face very strong competition, are also less likely to …

expected horizon is met. Hence search theory predicts the existence of a micro Phillips relation under plausible assumptions. …

survey data in the US Phillips curve, where the output gap plays a significant role but lagged inflation plays none. …

We show empirically that survey-based measures of expected inflation are significant and strong predictors of future … money illusion seems to be the driving force behind our results. Another popular hypothesis - inflation as a proxy for …

inflation expectations but learns about them from economic outcomes, which are in part the result of the disinflation policy … that under the DOP inflation stay between the levels implied by the CEP and the CP. A novel result is that this holds … irrespective of the initial level of inflation. Moreover, while at high levels of inherited inflation the DOP moves closer to the …

In this paper we systematically evaluate how central banks respond to inflation deviations from target. We present a … stylized New Keynesian model in which agents' inflation expectations are sensitive to inflation deviations from target. To (re …-)establish credibility, optimal monetary policy under discretion is shown to set higher interest rates today if average inflation exceeded …