This paper theoretically and empirically reevaluates price policy associated with deflation using the Balassa …-Samuelson theory (Balassa (1964), Samuelson (1964)). The theoretical model developed in this paper shows the relative price level (or … theory developed implies that the tendency of nominal appreciation (depreciation) of a country's currency causes declining …

optimal target rate of inflation in terms of the price of consumption. The Bayesian estimation of a dynamic general …I study the effect of the trending relative price of investment on the optimal target rate of inflation. The price of … of investment goods. The resulting optimal target rate of inflation is significantly positive with a median of 1 …