• Abstract
  • Non-technical summary
  • 1 Introduction
  • 2 The environment
  • 2.1 Households
  • 2.2 Wholesale fi rms
  • 2.3 Retail fi rms
  • 2.4 Monetary policy
  • 2.5 Market clearing
  • 3 The linearized equilibrium conditions
  • 3.1 Impulse responses
  • 4 Second order welfare approximation
  • 5 Optimal policy
  • 5.1 Discretion
  • 5.2 Optimal monetary policyunder commitment
  • 6 Conclusion
  • Appendices
  • References
  • Figures
  • European Central Bank Working Paper Series