Title of article
Trendinflation,wageandpricerigidities,andproductivitygrowth
Author/Authors
RobertAmano، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
12
From page
353
To page
364
Abstract
What arethesteady-stateimplicationsofinflationinageneral-equilibriummodelwith
real percapitaoutputgrowthandstaggerednominalpriceandwagecontracts?
Surprisingly,abenchmarkcalibrationimpliesanoptimalinflationrateof 1:9 percent.
The analysisalsoshowsthattrendinflationhasimportanteffectsontheeconomywhen
combinedwithnominalcontractsandrealoutputgrowth.Steady-stateoutputand
welfare lossesarequantitativelyimportantevenforlowvaluesoftrendinflation.
Further,nominalwagecontractingisfoundtobequantitativelymoreimportantthan
nominalpricecontractingingeneratingtheresults.Thisconclusiondoesnotarisefrom
price dispersion per se, butfromaneffectofnominaloutputgrowthontheoptimal
markup ofmonopolisticallycompetitivelaboursuppliers.Finally,accountingfor
productivity growthisfoundtobeimportantforcalculatingthewelfarecosts
of inflation.Indeed,thepresenceof2percentproductivitygrowthincreasesthewelfare
costs ofinflationinthebenchmarkspecificationbyafactoroffourrelativetotheno-
growthcase.
Keywords
Optimal inflationOptimal deflationMonetary policyNominal rigidities
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846298
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