This paper characterizes the optimal inflation buffer consistent with a zero lower bound on nominal interest rates in a … New Keynesian sticky-price model. It is shown that a purely forward-looking version of the model that abstracts from … inflation inertia would significantly underestimate the inflation buffer. If the central bank follows the prescriptions of a …

inflation should be positively related to the skewness and the variance of the distribution of disaggregated relative-price …The menu-cost models of price adjustment developed by Ball and Mankiw (1994; 1995) predict that short-run movements in … prices to measure the skewness and standard deviation of relative-price shocks. We find the Canadian data, both in the …

model with costly price adjustment to study the optimal rate of inflation when there are trends in relative prices and to … construct hypothetical U.S. inflation rates that would have minimized the costs of price adjustment implied by the model …Relative prices of some goods or sectors have long-run trends: For example, the price of services relative to goods has …

Many central banks worldwide announce numerical inflation targets, typically ranging from zero to two percent in … advanced economies and higher in developing countries. Historically, a significant gap existed between the inflation targets … for zero or negative inflation targets and surveys new forces justifying positive targets. Key factors include (i) trends …

Price-setting Microdata Analysis Network (PRISMA) for the level of inflation that central banks should target. The micro …This paper discusses the normative implications of the micro evidence on heterogeneity in price setting gathered by the … price data underlying the consumer price index are used to estimate relative price trends over the product life cycle …