inflation and deflationary biases in inflation expectations. In a model with an occasionally binding zero-lower-bound constraint …, we show that an inflation bias as well as a deflationary bias exist as a steady-state outcome. We assess the predictions … of this model using unique individual-level inflation expectations data across nine countries that allow for a direct …

positive at the onset of the episode, through promising higher inflation rates in future periods. We embed our theory into a … 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 …