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 …

state contingent inflation taxes/subsidies to smooth those rents. Hence, in the optimal Ramsey plan, inflation deviates from … zero and the optimal volatility of inflation is an increasing function of firing costs. The optimal rule should react to … employment alongside inflation …

shock. Third, we present evidence coherent with the idea that more leveraged sectors experience larger employment volatility … in normal times deep capital markets lead to tight labor markets. After an adverse liquidity shock, firms that rely much …

This paper analyzes the effects of different labor market institutions on inflation and output volatility. The eurozone … theory. While labor market institutions have a large effect on output volatility, they do not seem to have much of an effect … on inflation volatility, which can also be rationalized by our theoretical model …

We model empirically the role of labor market institutions in affecting the response of inflation to labor market and …-country differences in inflation adjustment for the "sheltered" (non-trading) sector; the effects in the "exposed" (trading) sector are … the Phillips curve in both sectors. More active LM policies also reduce the persistence of inflation. However, but only in …

period. The workers' bargaining power in the hours negotiation affects both unemployment volatility and inflation persistence … cost determination. This set-up produces realistic labor market statistics together with inflation persistence …