Hi Prof. Pfeifer, may I kindly ask a general perfect foresight question.
I read a disinflation paper where the authors simulate a permanent shock to the inflation target in a perfect foresight model. Before the disinflation policy, the economy is in an old steady-state with an old trend inflation rate (\pi_{old}). Disinflation policy is introduced and the economy transitions to a new steady-state with a new trend inflation rate (\pi_{new}).
This looks like a long-run effect of disinflation to me…but the paper refers to it as a short-run effect of a disinflation. Is it because the model is a stationary model?