Anticipated disinflation and recession in the New Keynesian model under learning

Bartholomew Moore

Economics Letters, 2016, vol. 142, issue C, 49-52

Abstract: In the New Keynesian model under rational expectations a disinflation announced in advance causes an expansion. This anomaly is robust to the assumption that monetary policy follows a Taylor rule. I show that under adaptive learning an anticipated disinflation causes a recession. Thus learning offers a resolution to the disinflationary-booms anomaly.

Keywords: Disinflation; Recession; Learning (search for similar items in EconPapers)
JEL-codes: D83 E52 E58 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:142:y:2016:i:c:p:49-52

DOI: 10.1016/j.econlet.2016.03.012

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