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Inflation persistence and optimal positive long-run inflation
(2007)
Within New Keynesian economics, the optimality of a monetary policy that aims at zero inflation is surprisingly robust. Optimal monetary policy has this character despite the inefficiency of the nonstochastic steady state ...
Optimal long-run inflation and the New Keynesian model
(Elsevier, 2012-08)
Central banks typically have a long-run inflation target that is modestly positive. However, the standard New Keynesian framework prescribes that zero inflation is the optimal longrun target. In this paper, we show that ...