We propose a new interest rate rule that implements the optimal equilibrium and eliminates all indeterminacy in a … nominal interest rates for a length of time that increases in proportion to how much past inflation has deviated - either … key principle is to respond strongly enough to deviations of past inflation from optimal levels by sufficiently increasing …

rely on the Neo-Fisherian mechanism of inducing an increase in inflation by first increasing interest rates. …

targets (inflation and output gap) are forward-looking variables in the new-Keynesian theory …

both determinacy and indeterminacy. The empirical results show that determinacy is preferred both before and after 1979 …. Even if monetary policy is found to react only mildly to inflation pre-Volcker, the substantial degrees of bounded … rationality that we estimate prevent the economy from falling into indeterminacy. …

rate to inflation can lead to debt disinflation dynamics that destabilize the financial sector. …

, however, these policy instruments are arbitrarily assumed to be forward-looking variables when policy targets (inflation and …

conditions and to any form of intertemporal or nominal-real links. They are easy to employ in practice, using inflation protected … bonds to infer real rates. With a time-varying inflation target, they can implement arbitrary inflation dynamics, including …