Should central banks, because of the zero-lower-bound problem, raise their inflation-rate targets? Several arguments … are relevant. (1) In the absence of the ZLB, the optimal steady-state inflation rate, according to standard New Keynesian … currency is feasible (even arguably attractive) and would remove the ZLB constraint on policy. (5) Increasing target inflation …

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 …

solutions such as the conservative central banker and optimal inflation contracts. Our theoretical model also shows how an … inflation targeting range should be set and how it should respond to changes in the nature of shocks to the economy …

This paper is concerned with the optimal inflation rate in an overlapping-generations economy in which (i) aggregate …

The question of price level versus inflation targeting remains controversial. Disagreement concerns, not so much the …

multiple solutions in rational expectations (RE) models. In three of these cases--involving inflation forecast targeting, the …