The Real Effects of Credible Disinflation in the Presence of Real Wage Rigidities
Bibliographic Data
| ID | 9724165 |
|---|---|
| Authors | Mewael F Tesfaselassie (Kiel Institute for the World Economy, corresponding author) |
| Year | 2019 |
| Volume | 86 |
| Issue | 344 |
| Pages | 728-749 |
| Publication date | 2019-10-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/ecca.12288 |
| OpenAlex | W2888245893 |
| Language | EN |
| References cited | 25 |
The paper re‐examines the real effects of credible disinflation in the presence of real wage rigidities and non‐linear dynamics. A credible, gradual disinflation is shown to lead to a delayed output slump along the transition path if real wage rigidities are sufficiently strong. This result is novel and holds across alternative models of nominal inertia—price staggering and price adjustment costs. In the special case of a cold‐turkey disinflation, price adjustment costs imply an immediate but short‐lived slump while price staggering implies a long‐lasting boom
Boom · Disinflation · Economics · Inertia · Inflation (cosmology) · Keynesian economics · Labour economics · Monetary economics · Monetary policy · Physics · Real wages · Slump · Thermodynamics · Wage · Economic theories and models · Economic Theory and Policy · Monetary Policy and Economic Impact
| Highly cited | No |
|---|