Credible Disinflation with Staggered Price Setting
This paper determines the real effects of credible disinflation when price setting is staggered. The results are surprising: a fairly quick disinflation causes a boom. This finding suggests that nominal price rigidity alone does not explain why disinflation is costly in actual economies.
|Date of creation:||Dec 1990|
|Date of revision:|
|Publication status:||published as American Economic Review, March 1994|
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- Christina D. Romer & David H. Romer, 1989.
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in: NBER Macroeconomics Annual 1989, Volume 4, pages 121-184
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- Romer, Christina D. & Romer, David H., 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," Department of Economics, Working Paper Series qt5h07k8vf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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- Ball, Laurence, 1994.
"Credible Disinflation with Staggered Price-Setting,"
American Economic Review,
American Economic Association, vol. 84(1), pages 282-89, March.
- Laurence Ball, 1990. "Credible Disinflation with Staggered Price Setting," NBER Working Papers 3555, National Bureau of Economic Research, Inc.
- Fischer, Stanley, 1977. "Long-Term Contracts, Rational Expectations, and the Optimal Money Supply Rule," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 191-205, February.
- Thomas J. Sargent, 1981. "Stopping moderate inflations: the methods of Poincaré and Thatcher," Working Papers 1, Federal Reserve Bank of Minneapolis.
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