The optimal inflation target and the natural rate of interest
We study how changes in the steady-state real interest rate affect the optimal inflation target in a New Keynesian DSGE model with trend inflation and a lower bound on the nominal interest rate. In this setup, a lower steady-state real interest rate increases the probability of hitting the lower b...
| Main Authors: | , , , |
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| Format: | Journal Article |
| Published: |
Brookings Institution Press
2019
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| Subjects: | |
| Online Access: | http://hdl.handle.net/20.500.11937/81197 |