Benigno, Pierpaolo; Woodford, Michael - In: Journal of the European Economic Association 3 (2005) 6, pp. 1185-1236
deviations of inflation and an output gap measure from their optimal values (zero). However, those derivations rely on an … defined output gap, though the degree of distortion of the steady state affects both the weights on the two stabilization … objectives and the definition of the welfare-relevant output gap. In the light of these results, we reconsider the conditions …