costs. I analyze how labor market institutions affect the macroeconomic dynamics, in particular, wage and inflation dynamics …, inflation and wages become less volatile and more persistent. I also find that the level of these labor market institutions … affect how wages and inflation respond to exogenous shocks, in particular, to productivity and monetary policy shocks. I …

We study the role of the cost of inflation channel in determining the risk premium in a (nonlinear) New Keynesian DSGE … model. Relying on a Calvo (or Rotemberg) price setting, we show that while the cost of inflation channel generates the …

and does not imply positive average inflation rates in equilibrium. Interestingly, the presence of binding real rate …

and does not imply positive average inflation rates in equilibrium. Interestingly, the presence of binding real rate …

, significant welfare losses. Losses increase further when inflation is partly determined by lagged inflation in the Phillips curve …. Targeting positive inflation rates reduces the frequency of a binding lower bound, but tends to reduce welfare compared to a …

and does not require targeting a positive average rate of inflation …

commiting to keep interest rates low at the exit of the liquidity trap, to stabilize inflation today. 2. From debt … consolidated budget) monetary policy becomes subservient to fiscal policy, giving rise to more volatile inflation, output and … interest rates. Liquidity trap (LT) episodes are longer, however, the impact of interest rate policy commitments on inflation …