Daudignon, Sandra; Tristani, Oreste - 2023
Empirical analyses starting from Laubach and Williams (2003) find that the natural rate of interest is not constant in … the long-run. This paper studies the optimal response to stochastic changes of the long-run natural rate in a suitably …, movements towards zero of the long-run natural rate cause an increasingly large downward bias in expectations. To offset this …