Optimal Monetary Policy Under Low Trend In fl ation

@inproceedings{Ascari2005OptimalMP,
  title={Optimal Monetary Policy Under Low Trend In fl ation},
  author={Guido Ascari and Tiziano Ropele},
  year={2005}
}
  • Guido Ascari, Tiziano Ropele
  • Published 2005
In this paper we generalize the standard optimal monetary policy literature as in Galí (2003) to the case of positive trend inflation. We present a simple framework that provides straightforward analytical results directly comparable with the standard case. Optimal monetary policy is strongly influenced by trend inflation and becomes less effective in controlling inflation as trend inflation increases. Moreover: (i) under discretion, optimal monetary policy may not be implementable (i.e… CONTINUE READING
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