Endogenous Persistence and the Performance of Inertial Targeting Rules
Lehman Brothers; Carleton College
New Keynesian DSGE model with habit formation in consumption generating intrinsic persistence in output gap, and Calvo pricing with price indexation to past inflation generating intrinsic persistence in inflation. Model features monopolisticall
monopolistically competitive price setters with Calvo-type nominal price rigidity and indexation to past inflation
Table 3 p.13
Speed limit targeting discretionary policy with model-consistent loss function; optimal lambda_SLT=0.07