We demonstrate the existence of a monetary policy tradeoff between price-inflation variability and output … empirically reasonable degree of nominal wage inertia, strict inflation targeting induces substantial output-gap volatility …

model indexation regulates the sources of inflation persistence. When indexation is zero, the inflation gap is purely … forward- looking and inflation persistence depends only on the level of trend inflation, while full indexation makes the … inflation gap persistent and it eliminates the effects of trend inflation. We show that in the former case the optimal policy is …

Even low levels of trend inflation substantially affect the dynamics of a basic new Keynesian DSGE model when monetary … policy is conducted by a contemporaneous Taylor rule. Positive trend inflation shrinks the determinacy region. Neither the … Taylor principle, which requires the inflation coefficient to be greater than one, nor the generalized Taylor principle …

explain the persistence of inflation. However, both of these theories are inconsistent with the micro data on prices. In this … difference between the GTE and its popular alternatives in terms of inflation persistence, a difference arises when it comes to …

targeting with inflation targeting while preserving monetarist results. In this monetarism without money, fiscal policy was not … needed in the short-run for macro stabilisation, and in the long-run could only lead to higher inflation rates and to higher … theory not least of which is a recognition that the theory of loanable funds is incapable of providing any insight into how …