policies designed to avoid the liquidity trap outcome. One is to link government's spending to the inflation rate. Subject to … the intertemporal budget constraint, the government's taxation on the private sector decreases as the inflation rate drops …

Central banks pay close attention to inflation expectations. In standard models, however, inflation expectations are … paper, the authors relax the assumption of rational expectations with perfect knowledge and reexamine the role of inflation … learning, disturbances can give rise to endogenous inflation scares, that is, significant and persistent deviations of …

Athanasios Orphanides and John C. Williams' excellent conference paper, "Inflation Scares and Forecast-Based Monetary …