Despite a large literature documenting that the efficacy of monetary policy depends on how inflation expectations are … anchored, many monetary policy models assume: (1) the inflation target of monetary policy is constant; and, (2) the inflation … changes to the inflation target and transitory perturbations of the short-term real rate. The public sector cannot correctly …

the average anticipated path of policy responses to inflation is subject to a lower bound of unity. This result helps … explain how bond rates may exhibit stable responses to inflation, even in periods of passive policy. Another possible … explanation is time-varying term premiums with risk pricing that depends on inflation. The authors present a no-arbitrage model of …

The term structure of inflation forecasts disagreement in the US can be summarized by two components: disagreement … about the trend inflation, and disagreement about the cyclical inflation. While the former has identical impacts on … forecasting horizons. Only the cyclical inflation disagreement has a significant impact on monetary policy efficacy. High …