Orphanides, Athanasios; Wieland, Volker - Federal Reserve Board (Board of Governors of the … - 1999
We study the design of monetary policy in a low inflation environment taking into account the limitations imposed by … influence the exchange rate. We find that the optimal policy near price stability is asymmetric, that is, as inflation declines … the possibility that the quantity of base money may affect output and inflation even when the interest rate is constrained …