theory. Since the price level should fall in the growing economy, introduction of negative inflation target is suggested … current state of positive inflation target. Possible criticism of this suggestion is anticipated and disproved in this paper …

area (EA) and the US. The estimations show that until mid-2014 the ECB's response to inflation was more forceful when … inflation was above 2% than below 2%. Since then, the ECB's policy can be characterised as symmetric, and we quantify the … bound and a low neutral real rate, and find that it prescribes a stronger response to inflation and the output gap when …

strategies with a strong history dependence lose their advantage over inflation targeting in mitigating a demand …-driven recessions when interest rates are constrained by the ELB. For supply shocks, inflation targeting outperforms history …-dependent rules for a sufficiently high degree of BR. An exponential average inflation targeting rule, which features a variable …

serves to attenuate the response to inflation and the output gap in the optimal interest rate rule. In contrast, a more … curve serves to attenuate the response to inflation but magnify the response to the output gap. Our results have …

implications for monetary policy as the central bank has to decide which inflation rate to target. Our results demonstrate that …

-specific output gaps and inflation rates, we find that performance of the optimal policy rule can be closely approximated by a very … simple rule that targets a weighted average of aggregate wage and price inflation rates. In contrast, some commonly …-prescribed policy rules (such as strict price inflation targeting and Taylor's rule) perform very poorly in terms of social welfare …

inflation and the output gap in the central bank's interest rate rule. Specifically, we isolate the influence of forward … some assumptions about forward-looking behavior that are motivated by economic theory, we show that a plausible set of …

. The nominal interest rate is the instrument of monetary policy. Special attention is devoted to inflation targeting and … the economy mimic the hypothetical equilibrium with flexible prices and wages. We explain why strict versions of inflation … targeting dominates inflation targeting for plausible parameter values …

between inflation and aggregate output. This study endeavors to advance previous studies in three ways. First, the literature …. These include the stock (and flow) of government debt, the issuance of inflation-indexed bonds, and the existence of … explicit inflation targets. Second, previous studies unfortunately exclude non-OECD countries. Third, the literature is divided …