demand and inflation. The central bank chooses the short-term policy rate and QE to minimise a welfare-based loss function …

eventually attain its long-run, positive inflation target. This illustrates that a credible long-run inflation target does not … level targeting does restore determinacy providing agents believe that inflation will eventually be positive. …

nominal interest rates, even when agents believe that the central bank will eventually attain its long-run, positive inflation … target. This illustrates that a credible long-run inflation target does not render the Taylor principle sufficient for …