On staggered prices and optimal inflation

Asier Aguilera-Bravo and Miguel Casares

Economics Letters, 2019, vol. 185, issue C

Abstract: This paper computes the steady-state optimal rate of inflation in a model with monopolistic competition under two different sticky-price specifications, Calvo (1983) and Taylor (1980). The optimal rate of inflation is positive and almost identical to the ratio between the rate of discount and the Dixit-Stiglitz elasticity.

Keywords: Monopolistic competition; Sticky prices; Optimal inflation (search for similar items in EconPapers)
JEL-codes: E12 E31 E52 (search for similar items in EconPapers)
Date: 2019
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Working Paper: On Staggered Prices and Optimal Inflation (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:185:y:2019:i:c:s0165176519303696

DOI: 10.1016/j.econlet.2019.108734

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