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Disinflation in a DSGE perspective: Sacrifice ratio or welfare gain ratio?

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  • Ascari, Guido
  • Ropele, Tiziano

Abstract

When used to examine disinflation monetary policies, the current workhorse dynamic stochastic general equilibrium model of business cycle fluctuations is able to quantitatively account for the main stylized facts in terms of recessionary effects and sacrifice ratio. We complement the transitional analysis of the short-run costs with a rigorous welfare evaluation and show that, despite the long-lasting economic downturn, disinflation entails non-zero overall welfare gains.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 36 (2012)
Issue (Month): 2 ()
Pages: 169-182

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Handle: RePEc:eee:dyncon:v:36:y:2012:i:2:p:169-182

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Web page: http://www.elsevier.com/locate/jedc

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Keywords: Disinflation; Sacrifice ratio; Non-linearities;

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Cited by:
  1. José A Carrasco-Gallego & Margarita Rubio, 2013. "Macroprudential and Monetary Policies: Implications for Financial Stability and Welfare," Discussion Papers 2013/04, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  2. Margarita Rubio, 2009. "Housing market heterogeneity in a monetary union," Banco de Espa�a Working Papers 0916, Banco de Espa�a.
  3. Rubio, Margarita & Carrasco-Gallego, José A., 2012. "Macroprudential Measures, Housing Markets, and Monetary Policy," Dynare Working Papers 23, CEPREMAP.

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