is accommodating changes in inflation and hence follows a destabilising policy. However, this impression seems to be …

, thereby controlling inflation expectations, it can improve welfare by stabilizing short-run aggregate shocks. The optimal …

Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In … our baseline calibration, the optimal rate of inflation is 2.1% and remains positive across a wide range of calibrations. …

contracts and positive inflation. Workers with relatively low incomes experience envy, whereas those with relatively high … incomes experience guilt. The former seek to raise their income, and latter seek to reduce it. The greater the inflation rate …, a rise in the inflation rate leads workers to supply more labor over the contract period, generating a significant …

This study analyses the impact of economic catching-up on annual inflation rates in the European Union with a special … Balassa-Samuelson effect is not an important driver of inflation rates. By contrast, we find that the initial price level and … regulated prices strongly affect inflation outcomes in a nonlinear manner and that the extension of Engel’s Law may hold during …

“tame the animal spirits”. This has the effect of improving the tradeoff between inflation and output volatility. …