In the aftermath of the financial crisis of 2007 - 2008 (and the resulting Great Recession) policymakers became concerned about a potential long-term effect of the crisis on the wider economy. For instance, in an ECFIN Economic Brief titled "The financial crisis and potential growth: Policy...

The paper examines the effect of trend productivity growth on the determinacy and learnability of equilibria under alternative monetary policy rules. Under zero trend inflation we show that the economic structure is isomorphic to that of Bullard and Mitra (2002) and show that under a policy rule...

In the current monetary policy framework, the ECB (as most central banks) set a target for the annual inflation rate as a nominal anchor to maintain price stability. The ECB inflation rate is defined as the year-on-year percentage change of the harmonised index of consumer prices. Nominal GDP...