This paper quantitatively evaluates a steady-state inflation rate that is considered optimal from the perspective of social welfare, using a model describing the Japanese economy. Specifically, we build a DSGE model capable of evaluating the effects, on social welfare, of points concerning the costs and benefits that accompany inflation: the opportunity cost of holding money, the zero lower bound on nominal interest rates, price stickiness and the downward wage rigidity. Building on this, we conduct stochastic simulations that calculate the social loss with different steady-state inflation rates, and investigate the optimal inflation rate. We also analyze the range of the optimal inflation rate when we change the model settings. J. Japanese Int. Economies 22 (4) (2008) 439-475.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 22 (2008) Issue (Month): 4 (December) Pages: 439-475 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF