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- W3122018626 abstract "Empirical studies show that successful disinflations entail a period of output contraction. Using a medium-scale New Keynesian model, we compare the effects of disinflations of different speed and timing, implemented through either a money supply rule or an interest rate rule. In terms of transitional output loss, cold-turkey disinflations under an interest rate rule are less costly than those under a money supply rule and are accomplished more rapidly. Furthermore, gradual or anticipated disinflations deliver lower sacrifice ratios. From a welfare perspective, despite the temporary economic contraction, the transitional welfare loss is quantitatively negligible, so that disinflations are overall welfare-improving. The overall welfare gain is not affected by how the disinflation is actually implemented: what really matters is the achievement of a permanently lower inflation rate." @default.
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- W3122018626 date "2013-07-01" @default.
- W3122018626 modified "2023-10-16" @default.
- W3122018626 title "Disinflation effects in a medium-scale New Keynesian model: Money supply rule versus interest rate rule" @default.
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- W3122018626 doi "https://doi.org/10.1016/j.euroecorev.2013.03.004" @default.
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