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Output Effects of Disinflation with Staggered Price Setting

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  • John A. Carlson

Abstract

A discrete‐time model with staggered price setting is shown to be flexible enough to analyze a variety of scenarios in which policymakers may introduce disinflation. While a recession need not necessarily occur, a semicredible disinflation (i.e., when price setters believe a new lower money growth rate will continue but do not act on future reductions) unambiguously depresses output with staggered prices, no matter how rapidly or slowly the disinflation is introduced.

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  • John A. Carlson, 2002. "Output Effects of Disinflation with Staggered Price Setting," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 947-956, April.
    • Handle: RePEc:wly:soecon:v:68:y:2002:i:4:p:947-956
    DOI: 10.1002/j.2325-8012.2002.tb00468.x
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