In the context of sluggish price expectations we show that inflation in transitional economies can push employment over its structural level that is determined by a bargaining process between workers and firm owners. The government can then seek an "optimal" inflation rate. When rational expectations are formed, governments may still seek an 'optimal' inflation rate which is lower according to the speed of company reforms and privatization.
FOURÇANS, A. and VRANCEANU, R. (1996). 'Optimal' Inflation Rates in Transitional Economies. In: 1996 Contemporary Working Paper. International Trade and Finance Association (ITFA), pp. 189-204.