On the risk of long-run deflation
Demosthenes Tambakis ()
Economics Letters, 2014, vol. 122, issue 2, 176-181
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.
Keywords: Zero lower bound; Long-run inflation; Monetary policy (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:122:y:2014:i:2:p:176-181
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