In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating … stabilize price movements in the flexible price sector. Also, in the presence of financial frictions, stabilizing core inflation … frictions a welfare-maximizing central bank should adopt flexible headline inflation targeting a target based on headline rather …

negative impact are threefold. First, perceived inflation overestimates the real increase in prices resulting in suboptimal …

due to nominal, but mostly real wage rigidity is substantial. The extent of real rigidity rises with inflation, whereas …, is most likely minimized in an environment with moderate inflation …

high during 2016-2019, keeping inflation below the Reserve Bank's target band. Optimal monetary policy in 2016-2019 would …

skilled workers being more complementary to capital than substitutable unskilled workers are (CSC channel). Strict inflation … introduce a trade-off between stabilizing inflation and aggregate demand …

find that housing tenure reacts more strongly to unexpected changes in the policy rate in Germany and Switzerland - the … in the policy rate by 25 basis points increases the home ownership rate by 0.8 percentage points in Germany and by 0 …

Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations …