good inflation. In addition, the Ramsey optimal monetary policy can be approximated reasonably well with a Taylor …-type interest rate rule with weights on both inflation rates and output. -- Inflation and Output Persistence ; Monetary Policy …

We use a simple New Keynesian model, with firm specific capital, non-zero steady-state inflation, long-run risks and … rate by 150 basis points causes output and inflation volatility to rise around 10% above their steady-state standard … deviations from the policy rule and the results are re-enforced by the presence of non-zero trend inflation. …

variances for all series, and decreases in the variances of inflation and the output gap, ithout any need of sunspot shocks …

policy shock, we distinguish between a standard policy rate shifter and a shock to trend inflation ie the time …-varying inflation target set by the Fed. While offering some statistical support to the cost channel, our estimated model clearly … implies a negative inflation reaction to a tightening of monetary policy. We offer a discussion of the possible sources of …