NBER WORKING PAPER SERIES ON THE WELFARE AND CYCLICAL IMPLICATIONS OF MODERATE TREND INFLATION Guido Ascari Louis Phaneuf Eric Sims Working Paper 21392 http://www.nber.org/papers/w21392 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 July 2015 We acknowledge Yuriy Gorodnichenko and Juan Rubio-Ramirez for helpful comments and suggestions at an early stage of this project, Sylvain Leduc for useful comments on the current draft and Jean-Gardy Victor for capable research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer- reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2015 by Guido Ascari, Louis Phaneuf, and Eric Sims. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.