Giannoni, Marc; Eggertsson, Gauti - Society for Economic Dynamics - SED - 2013
A rich literature from the 1970s shows that as inflation expectations become more and more ingrained, monetary policy … looses its stimulative effect. In the extreme, with perfectly anticipated inflation, there is no trade-off between inflation … inflation. In this paper, we reconcile these two insights by showing that while at positive interest rates, it is true that the …