This paper presents experimental evidence from a monetary sticky price economy in which output and inflation depend on … expected future inflation. With rational inflation expectations, the economy does not generate persistent deviations of output … and inflation in response to a monetary shock. In the experimental sessions, however, output and inflation display …

perceived inflation persistence by the private sector. Such a sophisticated policy reduces inflation persistence and inflation … volatility at little cost in terms of output gap volatility. Persistent responses to cost-push shocks and stability of inflation … play is very different. In the case of commitment it relies on expectations of future policy actions affecting inflation …

earlier studies, we find that US postwar data are consistent both with the view that inflation dynamics are forward … relevant determinant of inflation. We show that this is an important factor contributing to the weak identification of the …

, we follow Roberts (1997) and Adam and Padula (2003) and use direct measures of inflation expectations. The data source is … the Ifo World Economic Survey, which quarterly polls economic experts about their expected future development of inflation … turns out to more relevant for most countries in our sample. (ii) The use of survey data for inflation expectations yields a …

This paper contributes to the old theme of testing for rationality of inflation expectations in surveys, using two very … different surveys in parallel. Focusing on the euro area and using two well-known surveys that include questions on inflation … inflation forecasts. Tests are based on a preliminary discussion of the meaning of Rational Expectations in the macro …

perform poorly when knowledge is imperfect. In particular, policies that fail to maintain tight control over inflation are … prone to episodes in which the public's expectations of inflation become uncoupled from the policy objective and stagflation … effective communication of a central bank's inflation objective and of continued vigilance against inflation in anchoring …

order to facilitate private sector learning and thus ease the future intratemporal inflation-output gap trade-offs. The …

inflation and output gap stabilization. Specifically, the optimal interest rate rule reacts more aggressively to out …-of-equilibrium inflation expectations and noisy cost-push shocks than would be optimal under rational expectations: the Central Bank exploits …