Revisiting the optimal inflation rate with downward nominal wage rigidity: The role of heterogeneity
International Monetary Fund
New Keynesian DSGE model with heterogeneous workers differing in labor productivity, asymmetric wage adjustment costs capturing downward nominal wage rigidity (DNWR), Calvo price stickiness with non-zero steady-state inflation, job changes with
intermediate firms: monopolistic competition with Calvo pricing; final firms: perfect competition with CES aggregation
Table 6, Row 17
Higher responsiveness to inflation in Taylor rule (phi_pi=3)