The Optimal Rate of Inflation

@article{SchmittGroh2010TheOR,
  title={The Optimal Rate of Inflation},
  author={Stephanie Schmitt-Groh{\'e} and M. Uribe},
  journal={CEPR Discussion Paper Series},
  year={2010}
}
Observed inflation targets around the industrial world are concentrated at two percent per year. This paper investigates the extent to which the observed magnitudes of inflation targets are consistent with the optimal rate of inflation predicted by leading theories of monetary non-neutrality. We find that consistently those theories imply that the optimal rate of inflation ranges from minus the real rate of interest to numbers insignificantly above zero. Furthermore, we argue that the zero… Expand
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