What caused the U.S. economy's shift from the Great Inflation era to the Great Moderation era? A large literature shows … that the shift was achieved by the change in monetary policy from a passive to an active response to inflation. However …, Coibion and Gorodnichenko (2011) attribute the shift to a fall in trend inflation along with the policy change, based on a …

What caused the U.S. economy's shift from the Great Inflation era to the Great Moderation era? A large literature shows … that the shift was achieved by the change in monetary policy from a passive to an active response to inflation. However …, Coibion and Gorodnichenko (2011) attribute the shift to a fall in trend inflation along with the policy change, based on a …

trend inflation during Volcker's mandate was a key factor behind the Great Moderation. We revisit this finding with an … estimated New-Keynesian model with trend inflation and no indexation based on Christiano, Eichenbaum and Evans (2005). First …, our simulations confirm Coibion and Gorodnichenko's (2011) main finding. Second, we show that a trend inflation …

switches that either affect the inflation target or the response to inflation deviations from target lead to different … determinacy regions and different output, inflation, and interest rate distributions. With regime switching, the standard Taylor … determinacy. Switching inflation targets primarily affects the economy 's level, whereas switching inflation responses affects the …