Disinflation with imperfect credibility

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by
National Bureau of Economic Research , Cambridge, MA
Inflation (Finance) -- Mathematical models., Rational expectations (Economic theory) -- Mathematical mo
StatementLaurence Ball.
SeriesNBER working papers series -- working paper no. 3983, Working paper series (National Bureau of Economic Research) -- working paper no. 3983.
ContributionsNational Bureau of Economic Research.
The Physical Object
Pagination22, [5] p. :
ID Numbers
Open LibraryOL22439036M

As in New Keynesian models, price adjustment is staggered across firms. As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised disinflation. The combination of imperfect credibility and staggering,yields more plausible results than Dither of these assumptions by: Get this from a library.

Disinflation with imperfect credibility. [Laurence M Ball; National Bureau of Economic Research.]. This paper presents a theory of the real effects of disinflation. As in New Keynesian models, price adjustment is staggered across firms, As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised disinflation.

Description Disinflation with imperfect credibility EPUB

The combination of imperfect credibility and staggering yields more plausible results than either of these assumptions alone. In particular, an announced disinflation reduces expected output if credibility. As in New Keynesian models, price adjustment is staggered across firms, As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised disinflation.

The combination of imperfect credibility and staggering yields more plausible results than either of these assumptions alone. In particular, an announced disinflation reduces expected output if credibility is. Finance and Economics Discussion Series: Imperfect Credibility and Inflation Persistence [Christopher J.

Erceg, United States Federal Reserve Board, et al.] on *FREE* shipping on qualifying offers. In this paper, we formulate a dynamic general equilibrium model with staggered nominal contracts, in which households and firms use optimal filtering to disentangle persistent and Author: Christopher J.

Erceg. Both the endogenous initial degree of price rigidity and changes in the duration of price spells during disinflation are important in explaining the effects of imperfect credibility.

We initially consider a setup where the degree of credibility is fixed and then allow agents to update beliefs about the “type” of monetary authority that they by: According to the credibility hypothesis, the higher the monetary policy credibility the lower the social costs underlying the efforts to sustain price stability, that is, the disinflation cost.

Keywords: monetary policy, credibility, disinflation: Author’s E-Mail Address: [email protected], [email protected], [email protected], [email protected], [email protected] 1 C. Freedman is Scholar in Residence Disinflation with imperfect credibility book the Economics Department, Carleton University, Ottawa, Canada and Marianne Johnson is a Research Advisor at the Bank of Canada.

The views expressed in this paper. ARIMBI with Imperfect Credibility is a small scale model of a quarterly macroeconomic model adopted from GPM (Global Projection Model) IMF with the added feature of monetary policy credibility. However, because Indonesia does not have a good rate of unemployment data, the unemployment rate equation is not implemented.

Opportunistic and Deliberate Disinflation under Imperfect Credibility Antulio N Bomfim and Glenn Rudebusch Disinflation with imperfect credibility book Journal of Money, Credit and Banking,vol. 32, issue 4, Abstract: One strategy for disinflation prescribes a deliberate path towards low by: Opportunistic and Deliberate Disinflation Under Imperfect Credibility Antulio N.

Bomfim and Glenn D. Rudebusch December Abstract One strategy for disinflation prescribes a deliberate path towards low in-flation. A contrasting opportunistic approach eschews deliberate action and instead waits for unforeseen shocks to reduce by: As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised disinflation.

The combination of imperfect credibility and staggering yields more plausible. Imperfect credibility in a macroeconomic model: We build a very simple macroeconomic model of the Volcker disinflation which attributes all output costs to imperfect credibility.

To match the actual decline in inflation, which takes place from throughour model assumes that inflation declines gradually and cumulatively by 6 percentage points over 10 by: Endogenous time-dependent rules and the costs of disinflation with imperfect credibility Marco Bonomo disinßation increase when imperfect credibility and staggered price-setting are combined.

Details Disinflation with imperfect credibility FB2

bility. In the context of state-dependent rules, credibility simply affects the magnitude of the pricing rule change, with less credible. Disinflation under Imperfect Credibility One strategy for disinflation prescribes a deliberate path toward low inflation. A contrasting opportunistic approach eschews delib-erate action and instead waits for unforeseen shocks to reduce in-flation.

This paper compares the ability of these two approaches to achieve disinflation and at what cost. 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, ) or imperfect credibility (Ball, ) in isolation.

This results in higher output costs of monetary disinflation. Endogenous time-dependent rules and the costs of disinflation with imperfect credibility. This paper presents a theory of the real effects of disinflation.

As in New Keynesian models, price adjustment is staggered across firms, As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised disinflation. The combination of imperfect credibility and staggering yields more plausible results Author: Laurence Ball.

CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): The real effects of an imperfectly credible disinflation depend critically on the extent of price rigidity. Therefore, the study of how policymakers ’ credibility affects the outcome of an announced disinflation should not be dissociated from the analysis of the determinants of the frequency of price adjustments.

sticky inflation and imperfect credibility in explaining U.S. inflation persistence with survey data on inflation expectations, but he does not focus on disinflation episodes.

8 We use a model that is a modification of Calvo’s () model as in Chadha, Masson, andAuthor: R. G Gelos, Alessandro Prati, Oya Celasun.

Ball L. Disinflation with imperfect credibility. Journal of Monetary Econom 5 – Ball L. and S. Cecchetti Imperfect information and staggered price : Aaron L. Jackson. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): One strategy for disinflation prescribes a deliberate path towards low inflation.

A contrasting opportunistic approach eschews deliberate action and instead waits for unforeseen shocks to reduce inflation. This paper compares the ability of these two approaches to achieve disinflation—and at what cost. Opportunistic and deliberate disinflation under imperfect credibility.

Opportunistic and deliberate disinflation under imperfect credibility. Antulio N. Bomfim and Glenn Rudebusch (). NoFinance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Abstract: One strategy for disinflation prescribes a deliberate path towards low inflation.

A contrasting opportunistic approach eschews deliberate action and instead Cited by: We study the effects of a credible, gradual exchange rate based disinflation program in a two sector economy. After an initial real exchange rate depreciation, the reductions in the rate of devaluation reduce the monetary wedge generated by a cash in advance constraint, leading to a gradual increase in absorption that yields progressive real exchange rate appreciations and current account.

Endogenous Time-Dependent Rules and the Costs of Disinflation with Imperfect Credibility. The real effects of an imperfectly credible disinflation depend critically on the extent of price rigidity. Therefore, the study of how the policymaker's credibility affects the outcome of an announced disinflation should not be dissociated from the Author: Marco Bonomo and Carlos Viana de Carvalho.

Working Paper Opportunistic and deliberate disinflation under imperfect credibility Abstract: On strategy for disinflation prescribes a deliberate path towards low inflation. A contrasting opportunistic approach eschews deliberate action and instead waits for unforeseen shocks to reduce inflation.

In this paper we study the impact of a temporary lack of credibility in a transition to price quantify the effects of a period of disinflation on temporary output losses, and the impact of the lack of credibility on the optimal speed of disinflation.

We demonstrate that the "disinflationary booms" found by Ball () and Ireland () may or may not disappear in an environment. Download PDF: Sorry, we are unable to provide the full text but you may find it at the following location(s): (external link)Author: Laurence Ball.

“Inflation Targeting under Imperfect Credibility based on Table Periods for Disinflation Process Credibility Type Periods for Disinflation Process Medium Term (4%) Long Term (3%) Exogen Initial cred = priority is acknowledging our imperfect credibility!. This add-hoc. It appears that once inflation has risen substantially, imperfect credibility makes sizeable output losses in the transition to price stability highly likely, even when the speed of disinflation is 'optimal'.

In a related analysis Erceg and Levin come to some similar conclusions. They examine the Volcker disinflation under the assumption that.Abstract. The real effects of an imperfectly credible disinflation depend critically on the extent of price rigidity.

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Therefore, the study of how the policymaker's credibility affects the outcome of an announced disinflation should not be dissociated from the analysis of the determinants of Author: Marco Bonomo and Carlos Viana de Carvalho.Opportunistic and deliberate disinflation under imperfect credibility.

Abstract: One strategy for disinflation prescribes a deliberate path towards low inflation. A contrasting opportunistic approach eschews deliberate action and instead waits for unforeseen shocks to reduce inflation. This paper compares the ability of these two approaches to.