Optimal Redistributive Inflation
Banco de España
Huggett (1993) incomplete markets model extended to open economy with nominal long-term bonds, costly inflation (Rotemberg pricing), and heterogeneous households facing uninsurable idiosyncratic income risk
intermediate firms: monopolistic competition with Rotemberg quadratic price adjustment costs; final firms: perfect competition with Dixit-Stiglitz aggregation
Proposition 4 p.17 and Lemma 4
Optimal inflation with instantaneous bonds (delta approaches infinity)