Arseneau, David M.; Chugh, Sanjay K. - Federal Reserve Board (Board of Governors of the … - 2008
-term relationships, the optimal rate of price inflation volatility is very low even though all prices are completely flexible. This … based on Walrasian markets. Echoing the basic intuition of models based on sticky prices, unanticipated inflation in our … that give rise to long-lived customer relationships and makes pursuing inflation stability optimal. …