variances for all series, and decreases in the variances of inflation and the output gap, without any need of sunspot shocks …

-term inflation volatility in response to exogenous shocks can be optimal; the optimal response to adverse financial shocks is to … lower interest rates, if not at the zero bound, and to engineer a short period of controlled inflation; the Taylor rule may …

linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due … properties of interest-rate rules whereby the central bank responds to a measure of past inflation. The consensus view that has … inflation are likely to ensure global stability provided that the coefficient on lagged interest rates is greater than unity. …

This paper shows how endogeneous inflation inertia is generated by a simple modificaton of the quadratic adjustment … cost structure faced by economic agents. We derive the pertinent inflation relationships based on purely nominal rigidities …

line with empirical evidence, the model predicts a short-term inflation-output trade-off, a liquidity effect …

output and inflation across a population of firms is studied. The only form of heterogeneity is confined to the probability … of output and inflation depend crucially on the proportion of firms that are allowed to change their prices. We test this …-cyclical correlation between the skewness of inflation and aggregates, but the relation with output is less sure. Our results can be …