Output-inflation trade-offs and the optimal inflation rate

IF 1.9 3区 经济学 Q2 ECONOMICS
Takushi Kurozumi , Willem Van Zandweghe
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引用次数: 0

Abstract

We show that a positive superelasticity of demand, often referred to as “Marshall's Second Law of Demand,” is a new push factor of optimal inflation in staggered price models. The positive superelasticity alters the trade-offs between output and inflation in the models. It allows higher trend inflation to steepen the slope of a model-based Phillips curve and lower the steady-state average markup, and thus reduces the inflation-related weight in a model-based welfare function for higher trend inflation and the steady-state welfare cost of higher trend inflation. Consequently, the positive superelasticity can make the optimal trend inflation rate positive and lessen the welfare difference between inflation targets of 2 percent and 4 percent.

产出-通胀权衡与最优通胀率
我们的研究表明,在交错价格模型中,正的需求超弹性(通常被称为 "马歇尔需求第二定律")是最优通货膨胀的一个新的推动因素。正的超弹性改变了模型中产出与通胀之间的权衡。它允许较高的趋势通胀使基于模型的菲利普斯曲线斜率变陡、稳态平均加价降低,从而降低了基于模型的福利函数中与通胀相关的较高趋势通胀权重以及较高趋势通胀的稳态福利成本。因此,正的超弹性可以使最优趋势通胀率为正,并缩小 2% 和 4% 通胀目标之间的福利差异。
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来源期刊
CiteScore
3.10
自引率
10.50%
发文量
199
期刊介绍: The journal provides an outlet for publication of research concerning all theoretical and empirical aspects of economic dynamics and control as well as the development and use of computational methods in economics and finance. Contributions regarding computational methods may include, but are not restricted to, artificial intelligence, databases, decision support systems, genetic algorithms, modelling languages, neural networks, numerical algorithms for optimization, control and equilibria, parallel computing and qualitative reasoning.
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