Bartolomeo, Giovanni Di; Tirelli, Patrizio; Acocella, Nicola - Dipartimento di Economia, Metodi Quantitativi e … - 2011
We challenge the widely held belief that New-Keynesian models cannot predict optimal positive in‡ ations. We finnd that these are justified by the Phelps argument. This mainly happens because we also consider distortionary expects of public transfers. Our predictions are broadly consistent...