Disinflationary boom in a price-wage spiral model
Olivier Musy and
Economic Modelling, 2010, vol. 27, issue 1, 152-158
This paper analyses the impact of the disinflation policy timing on the sign and the magnitude of the sacrifice ratio in a modified price and wage staggered model of Blanchard (1986). When wages are updated every four quarters and prices every two quarters, we show that a "cold-turkey" disinflation is associated to an output boom when the policy is implemented during the last period of life of the wage contract and a recession in the other quarters.
Keywords: Disinflation; policy; Shock; timing; Sacrifice; ratio; Price; and; wage; staggered; contracts (search for similar items in EconPapers)
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Working Paper: Disinflationary boom in a price-wage spiral model (2010)
Working Paper: Disinflationary boom in a price-wage spiral model (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:27:y:2010:i:1:p:152-158
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