Rising inflation rates needed to stabilize investment prices, study finds.
The study looked at how the changing prices of investment goods affect the best inflation rate for the economy. They found that when investment prices are sticky, it's better to have a higher inflation rate to stabilize those prices. The model they used showed that the optimal inflation rate is actually quite high due to this price stickiness in the investment sector. This result held true even when they considered some investment goods with flexible prices.