Relative Prices and Inflation Stabilisation

Kosuke Aoki
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Kosuke Aoki: Faculty of Economics, University of Tokyo

No 47, UTokyo Price Project Working Paper Series from University of Tokyo, Graduate School of Economics

Abstract: When price adjustment is sluggish, inflation is costly in terms of welfare because it distorts various kinds of relative prices. Stabilising aggregate price inflation does not necessarily minimise these costs, but stabilising a well-designed core inflation minimises the cost of relative price fluctuations and thus the cost of inflation.

Keywords: Relative prices; inflation. (search for similar items in EconPapers)
JEL-codes: E3 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-02
New Economics Papers: this item is included in nep-mac and nep-mon
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