The Friedman rule states that steady-state welfare is maximized when there is deflation at the real rate of interest …. Recent work by Khan et al. (2003) uses a richer model but still finds deflation optimal. In an otherwise standard new … Keynesian model we show that, if households have hyperbolic discounting, small positive rates of inflation can be optimal. In …

model, covering a panel of EU countries, and derives the implied long-run inflation-unemployment tradeoff. Our results …

inflation and a permanent reduction in the level of unemployment. In short, we derive a microfounded long-run downward …

shifts in the parameters of wage equations when the process generating price inflation changes. The two major shifts that we …

This paper models Chinese inflation using an output gap Phillips curve. Inflation modelling for the world’s sixth … curve for China and show that the output gap, the exchange rate, and inflation expectations play important roles in … explaining inflation. We adjust for structural change in the economy where possible and estimate regressions for rolling sample …

This paper estimates the NAIRU (standing for the Non-Accelerating Inflation Rate of Unemployment) as a parameter that … varies over time. The NAIRU is the unemployment rate that is consistent with a constant rate of inflation. Its value is … determined in an econometric model in which the inflation rate depends on its own past values (‘inertia’), demand shocks proxied …

We develop and estimate a structural model of inflation that allows for a fraction of firms that use a backward looking … measures of marginal cost as the relevant determinant of inflation, as the theory suggests, instead of an ad-hoc output gap …. Real marginal costs are a significant and quantitatively important determinant of inflation. Backward looking price setting …

examining the relationship between inflation and unemployment, which sheds light on these developments. The theoretical section … similar inflation behaviour, in that inflation depends more closely on the capacity utilization rate than on the unemployment … high unemployment does not put downward pressure on the inflation rate. During the 1970s and 1980s in Germany, there …