How much inflation is necessary to grease the wheels?
Federal Reserve Board; University of Montreal
Small-scale DSGE model with asymmetric (linex) nominal wage adjustment costs allowing downward wage rigidity, Rotemberg quadratic price adjustment costs, monopolistic competition in goods and labor markets, Taylor-type monetary policy rule, and
monopolistic competition, decreasing returns to scale production, Rotemberg quadratic price adjustment costs
Figure 5
Optimal inflation target under strict inflation targeting regime with asymmetric wage adjustment costs