Andrade, Philippe; Galí, Jordi; Le Bihan, Hervé; … - 2019
We study how changes in the steady-state real interest rate affect the optimal inflation target in a New Keynesian DSGE … quantify that tradeoff and determine the implied optimal inflation target, conditional on the monetary policy rule in place … before the financial crisis. The relation between the steady-state real interest rate and the optimal inflation target is …