We analyze credible forward guidance policies in a sticky-price model with an effective lower bound (ELB) constraint on nominal interest rates by solving a series of optimal sustainable policy problems indexed by the duration of reputational loss. Lower-for-longer policies --- while effective in...

This paper characterizes optimal commitment policy in the New Keynesian model using a novel recursive formulation of the central bank's infinite horizon optimization problem. In our recursive formulation motivated by Kydland and Prescott (1980), promised inflation and output gap---as opposed to...

How can the central bank credibly implement a ``lower-for-longer'' strategy? To answer this question, we analyze a series of optimal sustainable policy problems---indexed by the duration of reputational loss---in a sticky-price model with an effective lower bound (ELB) constraint on nominal...