Optimal Inflation Rate Measurement for Minimizing Economic Inequality: The Dynamic Stochastic General Equilibrium Approach
محورهای موضوعی : Financial EconomicsAlireza Azizi 1 , Hashem Zare 2 , Abbas Aminifard 3 , Jalil Khodaparast Shirazi 4
1 - Department of Economics, Shiraz branch, Islamic Azad University, Shiraz, Iran
2 - Department of Economic, Shiraz Branch, Islamic Azad University, Shiraz, Iran
3 - Department of Economic, Shiraz Branch, Islamic Azad University, Shiraz, Iran
4 - Department of Economic, Shiraz Branch, Islamic Azad University, Shiraz, Iran
کلید واژه: Optimal Inflation Rate, Distribution of Income, Dynamic Stochastic General Equilibrium(DSGE),
چکیده مقاله :
The equitable distribution of income is considered as a development indicator in countries. Thus it is required to identify factors impacting the equitable distribution of income to make suitable policies to improve it. The present study aims to determine the optimal inflation rate in order to minimize income inequality by using the dynamic stochastic general equilibrium (DSGE) method in Iran during 1997-2017. The results revealed the optimal inflation rate to be 3.74%. An increase or reduction in the optimal inflation rate of 3.74% enhances income inequality. Thus, the government should target the inflation rate in its policies to achieve minimum inequality. Hence, inequality fluctuations (rises and declines) will be probable.
The equitable distribution of income is considered as a development indicator in countries. Thus it is required to identify factors impacting the equitable distribution of income to make suitable policies to improve it. The present study aims to determine the optimal inflation rate in order to minimize income inequality by using the dynamic stochastic general equilibrium (DSGE) method in Iran during 1997-2017. The results revealed the optimal inflation rate to be 3.74%. An increase or reduction in the optimal inflation rate of 3.74% enhances income inequality. Thus, the government should target the inflation rate in its policies to achieve minimum inequality. Hence, inequality fluctuations (rises and declines) will be probable.
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