This study revisits and tests empirically the Portfolio Theory of Inflation (PTI), which analyzes how the effectiveness … (Bossone, The portfolio theory of inflation and policy (in)effectiveness, 2019). The PTI shows that when an economy is heavily … and policies aimed to stimulate output growth dissipate into domestic currency depreciation and higher inflation, with …

similar result holds for inflation: to bring inflation to their desired rate, individuals would be willing to sacrifice around … 5% of their consumption. Willingness to pay to eliminate business cycles and inflation is generally higher for those …

inflation. A dynamic stochastic general equilibrium model with heterogeneous agents is studied. Incomplete markets induce agents … equilibria, I measure the welfare cost of inflation by explicitly modeling the transitional dynamics that arise following a … change in monetary policy. Transitional dynamics are shown to increase the welfare cost of inflation substantially. Also …

than rules that also include current or future inflation …

inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after …

We investigate the effectiveness of an aggressive anti-inflation monetary policy on the ability of agents to achieve … rational expectations equilibrium (REE) forecasts of inflation. An aggressive anti-inflation policy includes a willingness to … respond more forcefully to deviations from an inflation target. Using an adaptive learning framework, we develop a model that …

phenomena: (i) the flattening Phillips Curve and (ii) “well-anchored” inflation. In particular, I derive a Behavioral Attention … Phillips Curve (BAPC) whose slopes on the output gap and inflation expectations decline when inflation is less uncertain. When … inflation uncertainty is low, firms find it less costly to misperceive aggregate demand and inflation expectations, thus pay …