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On the risk of long-run deflation

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  • Tambakis, Demosthenes N.

Abstract

I determine expected long-run inflation in a two-state New Keynesian model driven by natural interest-rate uncertainty. Monetary policy switches between discretion in ‘normal times’ and zero-lower-bound episodes when it is passive. Long-run US inflation ranges from −1.8% to +1.2% p.a.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 122 (2014)
Issue (Month): 2 ()
Pages: 176-181

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Handle: RePEc:eee:ecolet:v:122:y:2014:i:2:p:176-181

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Zero lower bound; Long-run inflation; Monetary policy;

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  2. Adam, Klaus & Billi, Roberto M., 2005. "Discretionary monetary policy and the zero lower bound on nominal interest rates," CFS Working Paper Series 2005/16, Center for Financial Studies (CFS).
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  8. John C. Williams, 2009. "Heeding Daedalus: Optimal Inflation and the Zero Lower Bound," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(2 (Fall)), pages 1-49.
  9. Hess Chung & Jean-Philippe Laforte & David Reifschneider & John C. Williams, 2011. "Have we underestimated the likelihood and severity of zero lower bound events?," Working Paper Series 2011-01, Federal Reserve Bank of San Francisco.
  10. Levin, Andrew & López-Salido, J David & Nelson, Edward & Yun, Tack, 2009. "Limitations on the Effectiveness of Forward Guidance at the Zero Lower Bound," CEPR Discussion Papers 7581, C.E.P.R. Discussion Papers.
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  13. Ippei Fujiwara & Nao Sudo & Yuki Teranishi, 2010. "The Zero Lower Bound and Monetary Policy in a Global Economy: A Simple Analytical Investigation," International Journal of Central Banking, International Journal of Central Banking, vol. 6(1), pages 103-134, March.
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