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Cited by 359

The DOI matches its Crossref record; 50 of the 50 references it cites were found in a registry or an index.

The Optimal Inflation Rate in New Keynesian Models: Should Central Banks Raise Their Inflation Targets in Light of the Zero Lower Bound?

Coibion, O., Gorodnichenko, Y., Wieland, J.·2012·The Review of Economic Studies
DOI 10.1093/restud/rds013
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Abstract

We study the effects of positive steady-state inflation in New Keynesian models subject to the zero bound on interest rates. We derive the utility-based welfare loss function taking into account the effects of positive steady-state inflation and solve for the optimal level of inflation in the model. For plausible calibrations with costly but infrequent episodes at the zero lower bound, the optimal inflation rate is low, typically <2% even after considering a variety of extensions, including optimal stabilization policy, price indexation, endogenous and state-dependent price stickiness, capital formation, model uncertainty, and downward nominal wage rigidities. On the normative side, price-level targeting delivers large welfare gains and a very low optimal inflation rate consistent with price stability. These results suggest that raising the inflation target is too blunt an instrument to efficiently reduce the severe costs of zero bound episodes.

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Metadata

Authors
Coibion, O., Gorodnichenko, Y., & Wieland, J.
Venue
The Review of Economic Studies
Publisher
Oxford University Press (OUP)
Published
2012-03-07
Volume
79
Issue
4
Pages
1371-1406
ISSN
  • 0034-6527 (ISSN-L)
  • 1467-937X
DOI
10.1093/restud/rds013
OpenAlex
W2154801578
Cited by
359
References
50
FWCI
53.31
Type
journal article
Language
en
Open access
closed

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CoChat. (2026). Citation check: The Optimal Inflation Rate in New Keynesian Models: Should Central Banks Raise Their Inflation Targets in Light of the Zero Lower Bound? https://app.cochat.ai/papers/10.1093/restud/rds013
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Coibion, O., Gorodnichenko, Y., & Wieland, J. (2012). The Optimal Inflation Rate in New Keynesian Models: Should Central Banks Raise Their Inflation Targets in Light of the Zero Lower Bound? The Review of Economic Studies. https://doi.org/10.1093/restud/rds013

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Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.