We propose a novel framework where forward guidance (FG) is endogenously determined. Our model assumes that a monetary authority solves an optimal policy problem under commitment at the zero-lower bound. FG derives from two sources: 1. from commiting to keep interest rates low at the exit of the...

We explain the role of the Phillips Curve at the ECB in the analysis of the economic outlook and the formulation of monetary policy. First, revisiting the structural Phillips Curve, we highlight the challenges in recovering structural parameters from reduced-form estimates and relate the...

We estimate the effects of monetary policy on price-setting behavior in administrative micro data underlying the German producer price index. After expansionary monetary policy, the increase in the frequency of price change is economically small, the average absolute size across all price...

The New Keynesian Phillips Curve has become an inherent part of modern monetary policy models. It is derived from micro-founded models with rational expectations, sticky prices, and forward and backward-looking subjects on the market. Having reviewed about 200 studies, we analyze the weight of...

Inflation and earnings growth can push some tax payers into higher brackets in the absence of inflation-indexed schedules. Moreover, inflation may affect the composition of individuals’ income sources. As a result, depending on the relative tax burden of labor and capital, inflation may...

This paper introduces a new effective exchange rate regime classification. Traditional classifications define the stability or flexibility of a currency with respect to one ("anchor") currency, thus implicitly neglecting information on exchange rate relationships against other currencies. Our...