We study how changes in the value of the steady-state real interest rate affect the optimal inflation target, both in …-for-one: increases in the optimal inflation rate are generally lower than declines in the steady state real interest rate. Our approach … allows us not only to assess the uncertainty surrounding the optimal inflation target, but also to determine the latter while …

This paper considers the performance of average inflation targeting (AIT) policy in a New Keynesian model with adaptive … inflation targeting policy. Policymakers can improve outcomes under AIT by (i) targeting a discounted average of inflation, or …

We extend the Svensson (1997a) inflation forecast targeting framework with a convex Phillips curve. We derive an …

Assigning a discretionary central bank a mandate to stabilize an average inflation rate—rather than a period …-by-period inflation rate—increases welfare in a New Keynesian model with an occasionally binding lower bound on nominal interest rates … inflation targeting (AIT) is equivalent to price level targeting (PLT). However, AIT with a finite, but sufficiently long …

Assigning a discretionary central bank a mandate to stabilize an average inflation rate - rather than a period …-by-period inflation rate - increases welfare in a New Keynesian model with an occasionally binding lower bound on nominal interest rates … inflation targeting (AIT) is equivalent to price level targeting (PLT). However, AIT with a finite, but sufficiently long …

This paper considers the performance of average inflation targeting (AIT) policy when there is imperfect knowledge … steady state with interest rates at the zero lower bound, AIT does not outperform standard inflation targeting policy … responds aggressively to below-target average inflation …

staggered price setting that delivers familiar results on an inflationary bias and inflation contracts. However, the comparison … of price level and inflation targeting reveals an output/price stability tradeoff under the New-Keynesian model that does …

disinflation under inflation targeting policies. The analysis is motivated by the disinflation performance of many inflation … episode price-setting firms' expect inflation to be highly persistent and opt for backward-looking indexation. As the central … bank acts to bring inflation under control, price-setting firms revise their estimates of the degree of persistence. Such …

inflation are co-breaking. We argue that the step-like development of inflation is in line with shocks and monetary policy that …% inflation was accomplished by introducing an inflation targeting regime. …

inflation target lead to an immediate jump in the inflation level while the output gap is unaffected. We set up a theoretical … model where agents learn the behaviour of the economy. In this context, a permanent change in the inflation target leads … inflation to respond sluggishly while the output gap is temporarily affected. We extend the model to allow for both learners and …