optimal inflation for Iran by using general equlibrium model of Sydraski

Inflation as one of the most important considerable problems in economy has many harmful effectssuch as lack of optimum source allocation, retarding the process of economic development and creation of uncertaintyin the future. This study with the topic of "optimal inflation for Iran by using general equlibrium model of Sidrauski" is an attempt to clear one subset of inflation issue. The method of this study is descriptive-analytic. At first, we developed the Sydraskimodel,and for more accordance with reality, some parameters were added and it was solved by using Ramsey optimization method, which is a dynamic general equilibrium method. After gathering and estimating necessary data, the model was established and by using Matlab software,optimization and calibration operations were done. The results of investigation indicate that the optimal inflation, which is capable to bring the most social welfare for Iranian economy, is -0.0196. This rate, which expresses the most welfare, provides Freedman’s optimization formula. The results of theoretical model indicate that, reducing the money creation power of commercial banks by increasing legal reserve rateand population growth can lead to less optimal inflation.