Similar to the results obtained in the FRB/US model, the simulations of the small structural model show that inflation objectives as low as 2 percent per year place only limited constraints on monetary policy in stabilizing the economy. Specifically, with a 2 percent inflation objective as measured by the chain-weighted GDP price index—a broader
measure of inflation than either the PCE price index or the CPI policymakers are estimated to confront the zero bound 7 percent of the time. In contrast, with an inflation objective of 0 percent, the funds rate hits the zero bound 18 percent of the time