Imperfectly-Credible Disinflation of Small Inflations
In this paper we study and quantify the e¤ects of a disinflationary policy on output and welfare. Our focus is the policy question of the optimal response to low inflation.The analysis takes place in the context of a DSGE model with sticky prices, time varying velocity and imperfect credibility. The nonlinear solution method reveals that early output losses may be more pronounced and more prolonged than previously suggested in the literature, and there may be insufficient compensation from a subsequent higher steady state to justify taking any disinflationary policy action in some cases.
|Date of creation:||01 Jan 2010|
|Contact details of provider:|| Postal: Durham University Business School, Mill Hill Lane, Durham DH1 3LB, England|
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- Dibooglu, Sel & Kenc, Turalay, 2009. "Welfare cost of inflation in a stochastic balanced growth model," Economic Modelling, Elsevier, vol. 26(3), pages 650-658, May.
- Almeida, Heitor & Bonomo, Marco, 2002.
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Elsevier, vol. 49(7), pages 1317-1336, October.
- Almeida Neto, Heitor Vieira de & Bonomo, Marco Antônio Cesar, 1999. "Optimal state-dependent rules, credibility, and inflation inertia," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 349, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Marco Bonomo & Carlos Carvalho, 2010. "Imperfectly Credible Disinflation under Endogenous Time-Dependent Pricing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(5), pages 799-831, 08.
- Carvalho, Carlos Viana de & Bonomo, Marco Antônio Cesar, 2005. "Imperfectly credible disinflation under endogenous time-ependent pricing," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 600, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Marco Bonomo & Carlos Carvalho, 2008. "Imperfectly credible disinflation under endogenous time-dependent pricing," Staff Reports 355, Federal Reserve Bank of New York.
- Marco Bonomo & Carlos Viana de Carvalho, 2005. "Imperfectly Credible Disinflation under Endogenous Time-Dependent Pricing," Macroeconomics 0509005, EconWPA, revised 09 Sep 2005.
- Nicolae, Anamaria & Nolan, Charles, 2006. "The Impact of Imperfect Credibility in a Transition to Price Stability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(1), pages 47-66, February.
- Anamaria Nicolae & Charles Nolan, 2004. "The Impact Of Imperfect Credibility In A Transition To Price Stability," Royal Economic Society Annual Conference 2004 102, Royal Economic Society.
- Anamaria Nicolae & Charles Nolan, 2004. "The impact of imperfect credibility in a transition to price stability," Money Macro and Finance (MMF) Research Group Conference 2003 72, Money Macro and Finance Research Group.
- Anamaria Nicolae & Charles Nolan, 2004. "The Impact of Imperfect Credibility in a Transition to Price Stability," CDMA Working Paper Series 200402, Centre for Dynamic Macroeconomic Analysis.
- Lynne Evans & Anamaria Nicolae, 2010. "The Output Effect of a Transition to Price Stability When Velocity Is Time Varying," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(5), pages 859-878, 08.
- Serletis, Apostolos & Yavari, Kazem, 2004. "The welfare cost of inflation in Canada and the United States," Economics Letters, Elsevier, vol. 84(2), pages 199-204, August. Full references (including those not matched with items on IDEAS)
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