On Credible Disinflation
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On Credible Disinflation
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Author : Mr.Jorge Roldos
language : en
Publisher: International Monetary Fund
Release Date : 1993-11-01
On Credible Disinflation written by Mr.Jorge Roldos and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993-11-01 with Business & Economics categories.
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 deficits. An initial boom in economic activity is not followed by a later contraction, as labor supply expands during the whole length of the program.
On Credible Disinflation
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Author : Jorge Roldós
language : en
Publisher:
Release Date : 2006
On Credible Disinflation written by Jorge Roldós and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
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 deficits. An initial boom in economic activity is not followed by a later contraction, as labor supply expands during the whole length of the program.
Credible Disinflation Programs
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Author : Pierre-Richard Agénor
language : en
Publisher:
Release Date : 1993
Credible Disinflation Programs written by Pierre-Richard Agénor and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Deflation (Finance). categories.
Credibility Dynamics And Disinflation Plans
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Author : Rumen Kostadinov
language : en
Publisher: International Monetary Fund
Release Date : 2020-06-05
Credibility Dynamics And Disinflation Plans written by Rumen Kostadinov and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-06-05 with Business & Economics categories.
We study the optimal design of a disinflation plan by a planner who lacks commitment. Having announced a plan, the Central banker faces a tradeoff between surprise inflation and building reputation, defined as the private sector's belief that the Central bank is committed to the plan. Some plans are harder to sustain: the planner recognizes that paving out future grounds with temptation leads the way for a negative drift of reputation in equilibrium. Plans that successfully create low inflationary expectations balance promises of lower inflation with dynamic incentives that make them more credible. When announcing the disinflation plan, the planner takes into account these anticipated interactions. We find that, even in the zero reputation limit, a gradual disinflation is preferred despite the absence of inflation inertia in the private economy.
Credible Disinflation With Staggered Price Setting
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Author : Laurence M. Ball
language : en
Publisher:
Release Date : 1990
Credible Disinflation With Staggered Price Setting written by Laurence M. Ball and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990 with Anti-inflationary policies categories.
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.
Credibility Effects Of Price Controls In Disinflation Programs
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Author : Pierre-Richard Agénor
language : en
Publisher: International Monetary Fund
Release Date : 1992-10-01
Credibility Effects Of Price Controls In Disinflation Programs written by Pierre-Richard Agénor and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992-10-01 with Business & Economics categories.
This paper examines whether price controls may enhance the credibility of a disinflation program, using a framework in which agents behave strategically. The analysis indicates that a partial price freeze is not fully credible, and may result in inflation inertia. The authorities may be able to determine optimally the intensity of price controls so as to minimize the policy loss associated with a discretionary monetary strategy. But the optimal intensity of controls is shown to be significantly different from zero only if the cost of enforcing price ceilings is not too high, or if the weight attached to price distortions in the policymaker’s loss function is small.
Contracts Credibility And Disinflation
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Author : Stanley Fischer
language : en
Publisher:
Release Date : 1984
Contracts Credibility And Disinflation written by Stanley Fischer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1984 with Deflation (Finance) categories.
Estimates of the cost of disinflation made before the recent reduction in the inflation rate varied widely. Estimates were made in terms of the sacrifice ratio -- the percentage points of GNP at an annual rate lost per percentage point reduction in the inflation rate. At one extreme it was argued thata resolute and credible monetary policy could reduce inflation virtually costlessly. At the other extreme were estimates that the sacrifice ratio exceeded 10. Costless immediate disinflation is not possible in an economy with long-term labor contracts. This paper sets out a simple contracting model of wage and output determination and uses it to calculate sacrifice ratios for a disinflation program, under the assumption that announced policy changes are immediately believed. Under this assumption disinflation with a structure of labor contracts like those of the United States would be less costly than typically estimated. The model is then modified to allow for the slow adjustment of expectations of policy to actual policy; sacrifice ratios then approach the ranges typically estimated. The sacrifice ratio for the current disinflation is calculated in the last section: the current disinflation was somewhat more rapid and less costly than previous estimates suggested. The calculated sacrifice ratio is consistent with the predictions of the simple contracting model.
The Genesis Of Inflation And The Costs Of Disinflation
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Author : Laurence M. Ball
language : en
Publisher:
Release Date : 1991
The Genesis Of Inflation And The Costs Of Disinflation written by Laurence M. Ball and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991 with Inflation (Finance) categories.
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.
Models Of Inflation And The Costs Of Disinflation
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Author : Mr.Bankim Chadha
language : en
Publisher: International Monetary Fund
Release Date : 1991-10
Models Of Inflation And The Costs Of Disinflation written by Mr.Bankim Chadha and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991-10 with Business & Economics categories.
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.
Measuring Disinflation Credibility In Emerging Markets
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Author : Marco Rossi
language : en
Publisher:
Release Date : 2004
Measuring Disinflation Credibility In Emerging Markets written by Marco Rossi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Bayesian statistical decision theory categories.
This paper presents an empirical measure of disinflation credibility and discusses its evolution in Turkey since the 2001 crisis. The results indicate that credibility has improved markedly over this period, boding well for the future of disinflation in Turkey.