Optimal inflation rate measurement for minimizing economic inequality: The dynamic stochastic general equilibrium approach

Fair distribution of income in countries is one of the development indicators of each country. Therefore, it is necessary to adopt appropriate policies for its improvement in order to identify the effect of effective factors on it. In this study, the importance of determining the optimal inflation rate with the aim of minimizing income inequality by using the randomized dynamic equilibrium method in Iran between 1997 and 2020 is discussed. The results of the research indicate that the inflation rate is optimized to be 3.74 percent, so that the increase or decrease of inflation of this amount will increase income inequality. Therefore, the government should target its inflation rate with the aim of attaining the minimum inequality, so that the probability of fluctuations (increase or decrease) in inequality will exist.