3%: the magical inflation target

Developed countries have been keeping their inflation low, between 0 and 3%, for some time now. Developing countries have been trying to do the same with varying success. But what is so special about this range? In particular, why is it detrimental if inflation goes above 3%, or below 0%?

This question is indeed a pressing one as cross-country regressions of GDP on inflation fail to find any significant effect of inflation on GDP.

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