Dellas, Harris; Collard, Fabrice - Society for Computational Economics - SCE - 2004
We evaluate the case for perfect price (inflation) stabilization in a New Keynesian (NNS) model that includes capital … competition friction present (in the â€cashless†version of the model), inflation variability is costly independent of the level … of the shock. A small amount of inflation variability may become desirable when prices are fairly flexible and capital …