This paper studies Tobin's proposition that inflation quot;greasesquot; the wheels of the labor market. The analysis is … inflation is determined by a benevolent government that maximizes the households' welfare. The Simulated Method of Moments is … wages are downwardly rigid and that the optimal level of grease inflation for the U.S. economy is about 1.2 percent per year …

other sources of sluggishness to explain the observed high inflation persistence. Second, we confront empirically our fair … inflation outcomes …

acceptable. When asset market constraints bind, the model can deliver low real interest rates and positive rates of inflation at …

inflation, interest rate and stock returns. It employs the Vector Auto Regressive (VAR) approach method of Lee (1992) to analyze …

price puzzle by dividing our sample into pre-1991 period (before inflation targeting started) and during inflation targeting …

that produces a temporary decline in inflation when the central bank persistently raises interest rates. Inflation then …

Neo-Fisherites argue that conventional central banking wisdom has inflation control wrong, in that the way to increase … (reduce) inflation is to increase (reduce) the central bank’s nominal interest rate target …

, for example. I show that fixed periods underestimate the welfare cost of inflation. I use a model in which agents choose … inflation increases from 0.1 percent of income with fixed periods to one percent with optimal periods. The results are robust to …

variance decomposition of US inflation. We also find that domestic currency has higher share of the forecast error variance …