The present paper studies the effect of monetary policy on inflation and output within a New Keynesian model with … transmission in two ways. First, the impact response of inflation and output to monetary policy shocks is less pronounced since the … response of expectations under EBL is muted. Second, the response of inflation is more persistent, since the interest rate …

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 …

) modified the original curve in linking the unemployment rate to the inflation rate. This essay analyzes the links of the modern … discussion to the debates over time highlighting similarities, differences, and ways ahead regarding the formation of inflation … addressed as the anchoring of inflation expectations as a precondition for keeping inflation targets and the question whose …