The optimal inflation target and the natural rate of interest

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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...

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Bibliographic Details
Main Authors:	Le Bihan, Herve, Gali, Jordi, Andrade, Philippe, Matheron, Julien
Format:	Journal Article
Published:	Brookings Institution Press 2019
Subjects:	Inflation target, Effective lower bound, Natural Interest Rate, Steady-State Real Interest Rate
Online Access:	http://hdl.handle.net/20.500.11937/81197

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