Andrade, Philippe; Galí, Jordi; Le Bihan, Hervé; … - 2022 - This version: April 2021
inflation, imperfect indexation, and a lower bound on the nominal interest rate. In this setup, a decrease in the steady …-state real interest rate, r*, increases the probability of hitting the lower bound constraint, which entails significant welfare … increase in the inflation target, and assuming the effective lower bound prevents the European Central Bank from implementing …