This paper considers the performance of average inflation targeting (AIT) policy in a New Keynesian model with adaptive … inflation targeting policy. Policymakers can improve outcomes under AIT by (i) targeting a discounted average of inflation, or …

In this paper we consider inflation and government debt dynamics when monetary policy employs a global interest rate … interest rate rules are known to imply the existence of a second, low inflation steady state, below the target inflation rate … this low inflation steady state and is driven to an even lower inflation floor which, in turn, is supported by a switch to …