The optimal inflation rate under Schumpeterian growth

Koki Oikawa*, Kozo Ueda

*この研究の対応する著者

研究成果: Article査読

17 被引用数 (Scopus)

抄録

To analyze the relationship between inflation and economic growth, we construct an endogenous growth model with creative destruction, incorporating sticky prices due to menu costs. Price changes reduce the reward for innovation and thus lower the frequency of creative destruction. Central banks can maximize the growth rate by setting their inflation target at the negative of a fundamental growth rate. While the optimal inflation rate may be greater than the growth-maximizing inflation rate, our calibrated model shows that the optimal inflation rate is close to the growth-maximizing inflation rate and that a deviation from the optimal level has sizable impacts.

本文言語English
ページ(範囲)114-125
ページ数12
ジャーナルJournal of Monetary Economics
100
DOI
出版ステータスPublished - 2018 12

ASJC Scopus subject areas

  • 財務
  • 経済学、計量経済学

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