relative-price changes on inflation fluctuations. Therelative price of the flexible-price good represents a shift parameter of … the NewKeynesian Phillips curve. The optimal monetary policy is to target sticky-price inflation,rather than a broad … inflation measure... …

We describe a behavior of a central bank when its measures of current inflation and outputare subject to measurement … rateresponds to the central bank’s estimates of both current inflation and output gap, as advocatedby Taylor (1993)... …

, thebusiness cycle, and inflation, on account of the pronouncedprocyclical pattern of house prices. Are house prices asymptom of … transmissionmechanism by which changes in short-term interest rates affectconsumption, the output gap, and hence inflation. It isimportant …

current inflation and output, in the context of an optimizingmodel with nominal-price stickiness. Under a commitment regime …

two-way communication between the central bankand the public affects inflation dynamics. When inflation target is … hence the bank can stabilize inflation. However, when inflation targetis unobservable or less credible, the public updates … their perceived inflation target and theinformation revealed from markets to the bank becomes less perfect. The degree of …