Ramsey Monetary Policy with Capital Accumulation and Nominal Rigidities
Universitat Pompeu Fabra
New Keynesian model with capital accumulation, Rotemberg quadratic price adjustment costs, monopolistic competition, and Ramsey optimal monetary policy under fiscal incompleteness (no profit tax available)
intermediate firms: monopolistic competition with Rotemberg price adjustment costs; final firms: Dixit-Stiglitz aggregation
Figure 1 p.95
Golden rule constrained optimal inflation with low elasticity of demand (high markup)