Most macroeconomic models for monetary policy analysis are approximated around a zeroinflation steady state, but most central banks target inflation at a rate of about 2 percent. Many economists have recently proposed even higher inflation targets to reduce the incidence of the zero lower bound...

When taken to examine disinflation monetary policies, the current workhorse DSGE model of business cycle fluctuations successfully accounts for the main stylized facts in terms of recessionary effects and sacrifice ratio. We complement the transitional analysis of the short-run costs with a...

This note shows that full price indexation is not optimal in the long-run in the New Keynesian model. Moreover, we show that more price stickiness may increase steady state welfare, if price indexation is partial. -- Indexation ; Optimal Monetary Policy Rules ; New Keynesian model