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Endogenous time-dependent rules and the costs of disinflation with imperfect credibility

  • Bonomo, Marco Antônio Cesar
  • Carvalho, Carlos Viana de

This paper examines the output effects of monetary disinflation in a model with endogenous time-dependent pricing rules and imperfect credibility of the disinflation policy. We find that these features interact to generate an additional effect on top f the ones obtained with either endogenous time-dependent rules (Bonomo and Carvalho, 2003) or imperfect credibility (Ball, 1995) in isolation. This results in higher output costs of monetary disinflation.

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Paper provided by FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 505.

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Date of creation: 09 Oct 2003
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Handle: RePEc:fgv:epgewp:505
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