We combine an estimated monetary policy rule featuring time-varying trend inflation and stochastic coefficients with a … medium scale New Keynesian framework calibrated on the U.S. economy. We find the impact of variations in trend inflation on … counterfactual exercises suggest that the change in the Federal Reserve's policy response to inflation is likely to have been the …

, and time-varying trend inflation using post-WWII U.S. data. The model embedding the stochastic target performs better in … policy aggressiveness and inflation gap persistence. …