How Much Inflation is Necessary to Grease the Wheels?
dc.contributor.author | Kim, Jinill | |
dc.contributor.author | Ruge-Murcia, Francisco | |
dc.date.accessioned | 2008-02-01T19:08:47Z | |
dc.date.available | 2008-02-01T19:08:47Z | |
dc.date.issued | 2007 | |
dc.identifier.uri | http://hdl.handle.net/1866/2143 | |
dc.format.extent | 577453 bytes | |
dc.format.mimetype | application/pdf | |
dc.publisher | Université de Montréal. Département de sciences économiques. | fr |
dc.title | How Much Inflation is Necessary to Grease the Wheels? | en |
dc.type | Article | |
dc.contributor.affiliation | Université de Montréal. Faculté des arts et des sciences. Département de sciences économiques | |
dcterms.abstract | This paper studies Tobin's proposition that inflation "greases" the wheels of the labor market. The analysis is carried out using a simple dynamic stochastic general equilibrium model with asymmetric wage adjustment costs. Optimal inflation is determined by a benevolent government that maximizes the households' welfare. The Simulated Method of Moments is used to estimate the nonlinear model based on its second-order approximation. Econometric results indicate that nominal wages are downwardly rigid and that the optimal level of grease inflation for the U.S. economy is about 1.2 percent per year, with a 95% confidence interval ranging from 0.2 to 1.6 percent. | en |
dcterms.isPartOf | urn:ISSN:0709-9231 | |
dcterms.language | eng | en |
UdeM.VersionRioxx | Version publiée / Version of Record | |
oaire.citationTitle | Cahier de recherche | |
oaire.citationIssue | 2007-10 |
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