inflation and output. In normal times, factor costs dominate firms' marginal costs and hence inflation; credit spreads and the … stick shape. This mechanism also weakens the effects of forward guidance on inflation, since such policy reduces spreads and …

average inflation targeting (AIT). Inflation expectations significantly increase for the treated individuals. When provided … with additional information about near-term inflation, individuals update their expected inflation path in line with the … difference in medium-term inflation expectations from our survey results. Under AIT, inflation is substantially less volatile and …

larger in inflation responses and a breakdown of divine coincidence. The central bank's contemporaneous trade-off between … output gap and in inflation stabilization is aggravated. Optimal monetary policy is strongly forward-looking and geared … towards inflation stabilization …

strategies with a strong history dependence lose their advantage over inflation targeting in mitigating a demand …-driven recessions when interest rates are constrained by the ELB. For supply shocks, inflation targeting outperforms history …-dependent rules for a sufficiently high degree of BR. An exponential average inflation targeting rule, which features a variable …

inflation and output. In normal times, factor costs dominate firms' marginal costs and hence inflation; credit spreads and the … stick shape. This mechanism also weakens the effects of forward guidance on inflation, since such policy reduces spreads and …

Since the 2001 recession, average core inflation has been below the Federal Reserve's 2% target. This deflationary bias …-target inflation corrects the bias, improves welfare, and reduces the risk of deflationary spirals - a pathological situation in which … inflation keeps falling indefinitely. This approach does not entail any history dependence or commitment to overshoot the …

rate to inflation can lead to debt disinflation dynamics that destabilize the financial sector …