uu.seUppsala University Publications
Change search
ReferencesLink to record
Permanent link

Direct link
Labor market frictions and optimal steady-state inflation
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.ORCID iD: 0000-0002-9535-4404
2016 (English)In: Journal of Monetary Economics, ISSN 0304-3932, E-ISSN 1873-1295, Vol. 78, 67-79 p.Article in journal (Refereed) Published
Abstract [en]

In central theories of monetary non-neutrality, the Ramsey optimal steady-state inflation rate varies between the negative of the real interest rate and zero. This paper explores how the interaction of nominal wage and search and matching frictions affect the policy prescription. We show that adding the combination of such frictions to the canonical monetary model can generate an optimal inflation rate that is significantly positive. Specifically, for a standard U.S. calibration, we find a Ramsey optimal inflation rate of 1.16 percent per year.

Place, publisher, year, edition, pages
Elsevier, 2016. Vol. 78, 67-79 p.
Keyword [en]
Optimal monetary policy; Inflation; Labor market frictions
National Category
Research subject
URN: urn:nbn:se:uu:diva-285248DOI: 10.1016/j.jmoneco.2016.01.002ISI: 000374368400005OAI: oai:DiVA.org:uu-285248DiVA: diva2:921154
Ragnar Söderbergs stiftelse, E52/13
Available from: 2016-04-19 Created: 2016-04-19 Last updated: 2016-06-30Bibliographically approved

Open Access in DiVA

No full text

Other links

Publisher's full text

Search in DiVA

By author/editor
Carlsson, Mikael
By organisation
Department of Economics
In the same journal
Journal of Monetary Economics

Search outside of DiVA

GoogleGoogle Scholar

Altmetric score

Total: 119 hits
ReferencesLink to record
Permanent link

Direct link