A key policy question is: How high an inflation rate should central banks target? This depends crucially on the costs … of inflation. An important concern is that high inflation will lead to inefficient price dispersion. Workhorse New … Keynesian models imply that this cost of inflation is very large. An increase in steady state inflation from 0% to 10% yields a …

adjustment. As a result, the response of inflation to nominal shocks is both sluggish and hump-shaped. The model can also … qualitatively capture a number of stylized facts about price setting at the micro level and inflation at the macro level …

This paper analyzes the long-run determinants of inflation differentials in a monetary union. First, we aim at …some stylized facts relating the regional dispersion in headline inflation rates in the euro area as well as in the …-traded sector as the primary cause of price and inflation differentials, with shocks to productivity in the traded sector being …

survey-based experiment obtained during a period of government manipulation of inflation statistics in Argentina (2006 …-2015). This period is interesting because of the attention to inflation information and the availability of both official and … extract all its useful content. We also find evidence of an asymmetric reaction to inflation signals, with expectations …

-form solution for a long-run Phillips curve which relates average output gap to average wage inflation: it is virtually vertical at … high inflation and flattens at low inflation. Macroeconomic volatility shifts the curve outward and reduces output. The … results imply that stabilization policies play an important role, and that optimal inflation may be positive and differ across …

macroeconomic series (inflation, output, hours, interest rates, and wages), and which can be used to inform applied monetary policy …