Dear all, we kindly invite you to another Economic Theory & Policy talk for next week: on Thursday, March 13, 2025, 4:00 PM - TU Wien, Seminarroom: DB gelb 03 (Freihaus Building, 3rd floor, yellow area) Marco Airaudo (Drexel Univ.) https://www.lebow.drexel.edu/people/marcoairaudo "Overcoming Trend Inflation: The Power of Average Inflation Targeting" (joint with Fangqian Wu) We assess the performance of Average Inflation Targeting (AIT) in a New Keynesian model with trend inflation. Our findings show that AIT significantly outperforms traditional Inflation Targeting (IT) across several dimensions: (1) it expands the equilibrium determinacy region; (2) it dampens economic responses to shocks as trend inflation rises; and (3) under optimal monetary policy, the optimal AIT delegation closely approximates welfare under commitment and increasingly outperforms IT under discretion at higher trend inflation levels. These results establish AIT as a powerful monetary policy framework for environments with moderate positive trend inflation. Please note, that the talk of Harald Fadinger (University of Vienna) on Monday, March 10, will take place at Seminar room DA green 04 (Freihaus Building 4th floor, green area)! Further Events and details: https://www.tuwien.at/en/mg/econ/events Best, Julia Hutter for Alexia Fuernkranz-Prskawetz Julia Hutter TU Wien Institute of Statistics and Mathematical Methods in Economics Research Group Economics Phone: +43 1 58801 10531 Mail: julia.hutter@tuwien.ac.at<mailto:julia.hutter@tuwien.ac.at> https://econ.tuwien.ac.at/