Monetary Policy and the Drifting Natural Rate of Interest
Sciences Po - OFCE; European Central Bank
New Keynesian model with bonds-in-the-utility function providing liquidity benefits, permanent shocks to productivity growth rate following a bounded unit root process, and time-varying long-run natural rate of interest
monopolistic competition with Calvo-style price rigidities
Section 5, Figure 4
Constant price-level targeting rule (Eggertsson-Woodford) with zero drift