This paper looks at the implications of heterogeneous beliefs for inflation dynamics. Following a monetary policy shock …, inflation peaks after output, is inertial, and can be characterized by a Hybrid Phillips Curve. It presents a novel channel … through which systematic monetary policy can affect the degree of inflation persistence. It does so by altering the effective …

also tracks down the source of differences in the sustainability of Ramsey inflation encountered in the analyses of Sims …

causes untracked supply shocks to drive inflation. Because persistent supply shocks have a minor impact on interest rates …

permanent lower inflation rather than how this is practically accomplished. …

stabilizing inflation and reducing inefficient fluctuations, which is resolved by using consumer price inflation as a state … might improve upon a strict inflation targeting. -- Product market frictions ; oligopolistic competition ; optimal monetary …

This brief examines two issues of current interest concerning inflation: (1) whether "well-anchored" expectations will … help to restrain inflation's decline and whether an "un-anchoring" of expectations could lead to undesirably high inflation … and (2) to what extent output (or utilization) gaps are useful components of empirical models of inflation and, if they …

Why is it that inflation is persistently high in some periods and persistently low in other periods? We argue that lack … inflation lead the public to take defensive actions which then make it optimal for the monetary authority to validate those …

inflation and the output gap by at least two-thirds. These stabilization benefits can be substantially smaller if expectations …