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 …

estimation provides substantial evidence that the inflation and output preferences of the Fed have varied through time …

We analyze empirical links between the perceived tail-risk of inflation, the policy rate, longer-term interest rates … always in reaction to Fed announcements; and, (v) our impulse responses demonstrate that odds of extreme inflation outcomes …

autoregressive model. In a high inflation regime the standard results from the literature obtain. In a low inflation regime output … shows no significant response to monetary policy while the inflation response is negative. The paper endogenously determines …

either the inflation or the output gap varies in terms of magnitude and/or statistical significance across the high and low … inflation regimes in all countries. In particular, the exchange rate has an impact in the former but not in the latter regime …

either the inflation or the output gap varies in terms of magnitude and/or statistical significance across the high and low … inflation regimes in all countries. In particular, the exchange rate has an impact in the former but not in the latter regime …

inflation and output, and that terminating QE may be contractionary or expansionary, depending on the state of the economy at …

paper evaluates a sequence of inflation forecasts in the Norges Bank Inflation Report, and we present automatized forecasts … for the official forecasts. On the basis of the evidence, the recent inflation forecast failure appears to have been …