18 Eggertsson and Woodford (2003) provide an early discussion of how optimal monetary policy at the ELB entails a commitment to reflate the price level during the subsequent economic expansion. Nessén and Vestin (2005) discuss the relationship between average inflation targeting and price-level targeting. There is a dearth of empirical evidence on strategies seeking to make up for inflation deviations.
In doing so, it should alleviate the apprehension of banks that they may be subject to objections to their capital plans that are both very public and hard to fully anticipate.