paradigm of microeconomic theory and invoked since a tendency to think in nominal rather than real terms becomes evident in the … economy. Furthermore we introduce a velocity of money shock revisiting the Quantity Theory of Money within the open economy …

This paper evaluates inflation forecasts made by Norges Bank which is recognized as a successful forecast targeting … central bank. It is reasonable to expect that Norges Bank produces inflation forecasts that are on average better than other … margin. An explanation in terms of too high speed of adjustment to the inflation target is supported by the evidence. Norges …

adjusted as a linear function of inflation and output gap. However, the rule does not take explicitly into account the zero …

inflation arising from higher unemployment in a standard Phillips curve framework is significantly cushioned. This might help to … understand the robustness of inflation especially in the most recent past. In general, the cyclical dynamics of inflation appear …

-price model with firm-level productivity growth fits this data and predicts that the optimal long-run inflation rate is positive … long-run inflation near zero. Despite positive long-run inflation, the Taylor principle ensures determinacy in the model … with firm-level productivity growth, and optimal inflation stabilization policies are standard. In a two-sector extension …