long run. In particular, we show that if monetary policy reacts aggressively to inflation, this supports a steady state … where inflation is close to the central bank's target. However, the same aggressive policy simultaneously favours the … inflation are lower and monetary policy is constrained by the effective lower bound. We discuss how fiscal policy can be used to …

countries where the monetary regime is Inflation Targeting (IT). Central Banks under an IT regime tend to define the target rate … model to data from Brazil. Brazil came up with the right place to applying our model because it has adopted an inflation …