react in opposite directions to a shock to the real economy, and the response of inflation to uncertainty shocks vary across …

-pricing theory, is calibrated to analyze the effects of monetary policy and financial innovation. We show that inflation can raise … output, employment and investment, plus improve housing and stock markets. For the baseline calibration, optimal inflation is …

-side uncertainty. Using term structure and macroeconomic data, we find sizable effects of uncertainty on risk premia and business cycle …, but supply-side uncertainty has larger effects on inflation and investment. We introduce a novel analytical decomposition … to illustrate how multiple distinct risk propagation channels account for these differences. Supply and demand …

output-inflation volatility frontier of each model for alternative specifications of the interest rate rule, subject to an …-difference of the federal funds rate responds to the current output gap and the deviaition of the 1-year average inflation rate from … inflation deviation fromt target. Furthermore, first-difference rules generate essentially the same policy frontier as more …

stance. When decomposing the VIX into two components, a proxy for risk aversion and expected stock market volatility … ("uncertainty"), we find that a lax monetary policy decreases both risk aversion and uncertainty, with the former effect being …

general-equilibrium theory of exchange rate determination based on the interaction between monetary policy and time … volatility shocks is consistent with the empirical evidence. Furthermore we show that risk factors and interest-rate smoothing …

about the effect of the NAIRU gap on inflation does require adjustments to the policy reaction function. Also, as in …