Bakhshi, Hasan; Burriel-Llombart, Pablo; Khan, Hashmat; … - Bank of England - 2003
For standard calibration, this paper shows that the optimal price, in a model with Calvo form of price stickiness and strategic complementarities, is only defined for annualised trend inflation rates of under 5.5%. This critical inflation rate is below the average inflation rate over recent...
