On staggered prices and optimal inflation

• Asier Aguilera-Bravo ^[1] ; Miguel Casares ^[1]
  1. [1] Universidad Pública de Navarra

     Universidad Pública de Navarra

     Pamplona, España

     
• Localización: Documentos de Trabajo ( Universidad Pública de Navarra. Departamento de Economía ), Nº. 2, 2019
• Idioma: inglés
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• Resumen

  • This paper computes the steady-state optimal rate of inflation assuming two different sticky-price specifications, Calvo (1983) and Taylor (1980), in a model with monopolistic competition. The optimal rate of inflation in steady state is always positive. This result is robust to changes in the degree of price stickiness. In both cases of staggered prices, the optimal rate of inflation is approximately equal to the ratio between the rate of discount and the Dixit-Stiglitz elasticity.