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Disinflation in a DSGE Perspective: Sacrifice Ratio or Welfare Gain Ratio?

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  • Guido Ascari
  • Tiziano Ropele

Abstract

When taken to examine disinflation monetary policies, the current workhorse DSGE model of business cycle fluctuations successfully accounts 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

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1499.

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Length: 31 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:kie:kieliw:1499

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Keywords: Disinflation; Sacrifice ratio; Non-linearities;

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Citations

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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. Rubio, Margarita & Carrasco-Gallego, José A., 2012. "Macroprudential Measures, Housing Markets, and Monetary Policy," Dynare Working Papers 23, CEPREMAP.
  3. Rubio, Margarita, 2014. "Housing-market heterogeneity in a monetary union," Journal of International Money and Finance, Elsevier, vol. 40(C), pages 163-184.

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