Models of Inflation and the Costs of Disinflation PDF Download
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Author: Mr.Bankim Chadha
Publisher: International Monetary Fund
ISBN: 1451949480
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
This paper focuses on the output costs of disinflation. A model of inflation with both forward and backward elements seems to characterize reality. Such an inflation model is estimated using data for industrial countries, and the output costs of a disinflation path are calculated, first analytically in a simple theoretical model, then by simulation of a global, multi-region empirical model. The credibility of a preannounced path for money consistent with the lowest output loss is considered. An alternative, more credible policy may be to announce an exchange rate peg to a low inflation currency.
Author: Mr.Bankim Chadha
Publisher: International Monetary Fund
ISBN: 1451949480
Category : Business & Economics
Languages : en
Pages : 34
Get Book Here
Book Description
This paper focuses on the output costs of disinflation. A model of inflation with both forward and backward elements seems to characterize reality. Such an inflation model is estimated using data for industrial countries, and the output costs of a disinflation path are calculated, first analytically in a simple theoretical model, then by simulation of a global, multi-region empirical model. The credibility of a preannounced path for money consistent with the lowest output loss is considered. An alternative, more credible policy may be to announce an exchange rate peg to a low inflation currency.
Author: Bankim Chadha
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
Get Book Here
Book Description
This paper focuses on the output costs of disinflation. A model of inflation with both forward and backward elements seems to characterize reality. Such an inflation model is estimated using data for industrial countries, and the output costs of a disinflation path are calculated, first analytically in a simple theoretical model, then by simulation of a global, multi-region empirical model. The credibility of a preannounced path for money consistent with the lowest output loss is considered. An alternative, more credible policy may be to announce an exchange rate peg to a low inflation currency.
Author: Bankim; Masson Chadha (Paul; Meredith, Guy)
Publisher:
ISBN:
Category :
Languages : fr
Pages :
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Book Description
Author: Antulio Bomfim
Publisher:
ISBN:
Category : Deflation (Finance)
Languages : en
Pages : 54
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Book Description
Author: Antulio N. Bomfim
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The macroeconomic costs of disinflation are considered for the United States in a rational expectations macroeconometric model with sticky prices and imperfect information regarding monetary policy objectives. The analysis centers on simulation experiments using the Board's new quarterly macroeconometric model, FRB/US, within which are nested both expectations formation that is 'rational' (i.e., model consistent) and 'restricted-information rational' (i.e., where the information set is restricted to that captured by a small-scale VAR model). We characterize monetary policy as being governed by rules. Disinflations are represented by changes in the target inflation rate of a interest-rate reaction function. Two kinds of rules are considered: a version of the Taylor rule and the other being a more aggressive and richer specification estimated using data for the last 15 years. We assume agents are not fully cognizant of changes in the Fed's inflation target and must instead adjust their perceptions of the target according to a linear updating rule. Simulation results for sacrifice ratios are compared with results from other models and with econometric results and calculations reported in the literature.
Author: Gian Maria Milesi-Ferretti
Publisher:
ISBN:
Category : Deflation (Finance)
Languages : en
Pages : 48
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Book Description
Author: Mr.Atish R. Ghosh
Publisher: International Monetary Fund
ISBN: 1451961189
Category : Business & Economics
Languages : en
Pages : 45
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Book Description
Although few would doubt that very high inflation is bad for growth, there is much less agreement about moderate inflation’s effects. Using panel regressions and a nonlinear specification, this paper finds a statistically and economically significant negative relationship between inflation and growth. This relationship holds at all but the lowest inflation rates and is robust across various samples and specifications. The method of binary recursive trees identifies inflation as one the most important statistical determinants of growth. Finally, while there are short-run growth costs of disinflation, these are only relevant for the most severe disinflations, or when the initial inflation rate is well within the single-digit range.
Author: Laurence M. Ball
Publisher:
ISBN:
Category : Inflation (Finance)
Languages : en
Pages : 44
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Book Description
This essay asks how high inflation arises and why it is costly to eliminate. Specifically, the paper discusses the roles of price rigidity and credibility problems in explaining the costs of disinflation; the puzzle of persistent inflation triggered by onetime macroeconomic shocks; and the case for returning to adaptive expectations in theories of inflation.
Author: Mr.Peter B. Clark
Publisher: International Monetary Fund
ISBN: 145184350X
Category : Business & Economics
Languages : en
Pages : 51
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Book Description
Most empirical work on the U.S. Phillips curve has had a strong tendency to impose global linearity on the data. The basic objective of this paper is to reconsider the issue of nonlinearity and to underscore its importance for policymaking. After briefly reviewing the history of the Phillips curve and the basis for convexity, we derive it explicitly using standard models of wage and price determination. We provide some empirical estimates of Phillips curves and Phillips lines for the United States and use some illustrative simulations to contrast the policy implications of the two models.
Author: Leonardo Leiderman
Publisher: University of Chicago Press
ISBN: 9780226471105
Category : Business & Economics
Languages : en
Pages : 364
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Book Description
During the early 1980s, Israel's inflation rate rose to almost 500% per year—one of the highest inflation rates in the developed world. In 1985, the Israeli government implemented a program that immediately reduced inflation to 15%-20%, where it remained for the rest of the decade. How did the economy deal with these major changes so rapidly and successfully? In these eighteen articles, Leonardo Leiderman discusses why the Israeli plan worked and considers how other countries might benefit from similar policies. Even though standard economic models predict that output will drop and unemployment will rise during disinflation, Israel saw a boom in private consumption and large increases in real wages that lasted for about three years. To understand how the effects of Israeli disinflation policies defied typical expectations, Leiderman investigates how monetary fiscal policy determined Israel's runaway inflation and how the country brought its economy abruptly under control. He finds that rates of inflation and consumption depend on the public's expectations about future fiscal adjustments and that foreign trade shocks do not inevitably lead to a long-term rise in the inflation rate. His illumination of international trade and domestic policies, past and present, will interest academic economists and policymakers alike.
