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Note that in this case the unique solution is the same as the low-inflation steady state of the standard model.
Under adaptive learning, the economy is driven to the low-inflation steady state at which the target revenues are attained.
After that, it seems the inflation path appears to be characterized by the stability properties of the low-inflation stationary equilibrium.
The costs imposed by this episode of higher inflationary expectations induce the monetary authority to adhere to the low-inflation policy.
However, with a sufficiently tight fiscal constraint, the low-inflation steady state is globally stable.
The first outcome was convergence to the low-inflation stationary equilibrium.
Alternatively, we may also reason that the absence of clear-cut relation between inflation and growth can be attributed to equilibrium indeterminacy emerged in the low-inflation economies.
In the low-inflation environment since, central banks have, in the eyes of many monetary economists, changed from a source of (often) politically induced inflation to maximizers of social welfare.
The principal one is to achieve a healthy, low-inflation economy which grows solidly and consistently.
Above all, some see it as achieving price stability—not only a single currency zone, but a low-inflation zone.
We have, in fact, a fast-growing, low-inflation economy with a competitive currency.
Moreover, there are dangers in making a mechanical change without having established a low-inflation credential and record.
In my judgment, that can come only from a low-inflation economy, lower taxes and lower interest rates.
All this has a particular importance for monetary policy, for stage 1 will create powerful pressures on member states to adopt low-inflation policies.
The prospects for continuing steady low-inflation growth have rarely looked better.