complementarities in price setting delivers a strictly positive optimal inflation in steady state, differently from standard New … inflation curbs the markups, especially those of the more productive firms, hence attenuating the inefficient dispersion of … markups. At low levels of inflation, the gains from the reduction in misallocation outweigh the cost of inflation …

complementarities in price setting delivers a strictly positive optimal inflation in steady state, differently from standard New … inflation curbs the markups, especially those of the more productive firms, hence attenuating the inefficient dispersion of … markups. At low levels of inflation, the gains from the reduction in misallocation outweigh the cost of inflation …

ation target can be estimated from the observed trends in relative prices. The optimal inflation target for the U.K. is …

inflation target can be estimated from the observed trends in relative prices. The optimal inflation target for the U.K. is …

different predictions for the optimal inflation rate than their popular homogenous-firm counterparts: (1) the optimal steady …-state inflation rate generically differs from zero and (2) inflation optimally responds to productivity disturbances. We show this by … estimate the historically optimal inflation path for the U.S. economy. In the year 1977, the optimal inflation rate stood at 1 …

. Aggregating the model in closed form, we show that it delivers radically different predictions for the optimal inflation rate than … canonical sticky price models featuring homogenous Firms: (1) the optimal steady-state inflation rate generically differs from … zero and, (2) inflation optimally responds to productivity disturbances. Using micro data from the US Census Bureau to …