Optimal Monetary Policy Under Low Trend In fl ation

  title={Optimal Monetary Policy Under Low Trend In fl ation},
  author={Guido Ascari and Tiziano Ropele},
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


Publications referenced by this paper.

Average inflation targeting

  • M. Nessén, D. Vestin
  • Journal of Money, Credit and Banking 37, 837—863.
  • 2005
Highly Influential
4 Excerpts

Staggered prices and trend inflation: Some nuisances

  • G. Ascari
  • Review of Economic Dynamics 7, 642—667.
  • 2004
Highly Influential
13 Excerpts

Endogenous price stickiness, trend inflation, and the new keynesian phillips curve

  • H. Bakhshi, P. Burriel-Llombart, H. Khan, B. Rudolf
  • Mimeo, Bank of England.
  • 2002
Highly Influential
2 Excerpts

Similar Papers

Loading similar papers…