_Ref337633482 -- Ref_XBasel%3Areprcb -- Ref_XGoodhartC%3Afisbsc -- Ref_XTurnerA%3Aturnrr -- Ref_XCihakM%3Acasebc -- Table 1 Estimates of tariff equivalents on manufactured goods resulting from all trade barriers (in per cent) -- Table 2 Effects of UK and EU tariff of 10 per cent on agriculture...

When indexation is endogenous price level targeting slightly adds to economic stability, contrary to widespread fears to the contrary. The aggregate supply curve flattens and the aggregate demand curve steepens, increasing stability in the face of supply shocks.

This paper offers an alternative rationalization for opportunistic behaviour i.e., a gradual disinflation strategy where policymakers react asymmetrically to supply shocks, opting to disinflate only in recessionary period. Specifically, we show that adaptive expectations combined with asymmetry...