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- W2140538709 abstract "This paper characterizes the optimal inflation buffer consistent with a zero lower bound on nominal interest rates in a New Keynesian sticky-price model. It is shown that a purely forward-looking version of the model that abstracts from inflation inertia would significantly underestimate the inflation buffer. If the central bank follows the prescriptions of a welfaretheoretic objective, a larger buffer appears optimal than would be the case employing a traditional loss function. Taking also into account potential downward nominal rigidities in the price-setting behavior of firms appears not to impose significant further distortions on the economy." @default.
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- W2140538709 date "2004-01-01" @default.
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- W2140538709 title "The Optimal Inflation Buffer with a Zero Bound on Nominal Interest Rates" @default.
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- W2140538709 doi "https://doi.org/10.2139/ssrn.700263" @default.
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