Optimal inflation to reduce inequality
Banco de Mexico; University of Milano-Bicocca; Griffith University
DSGE model with Limited Asset Market Participation (LAMP) where constrained agents hold only money while unconstrained agents have full access to financial markets and own firms. Includes alternative money demand specifications: classical trans
intermediate firms: monopolistic competition with Rotemberg price adjustment costs; final good firms: perfect competition; labor packers: perfect competition aggregating differentiated labor
Table 3
Classical money demand, representative agent (theta=0), b/y=0.6