The overall rise in the cost of goods and services over time in an economy is referred to as inflation, an economic concept. It has a big impact on people, businesses, and governments and is a crucial economic health indicator. The goal of this page is to provide a thorough explanation of...

A central tenet of the so-called new consensus view in macroeconomics is that there is no long-run trade-off between inflation and unemployment. The main policy implication of this principle is that all monetary policy can aim for is (modest) short-run output stabilization and long-run price...

With sticky prices, optimizing agents and money in the utility function, I derive the exact analytical solution for optimal monetary policy given a zero lower bound (ZLB) on the interest rate. The Phillips curve is Neo-Classical, and the ZLB is then not a constraint on optimal policy. Optimal...