Opportunistic and Deliberate Disinflation under Imperfect Credibility

Antulio Bomfim and Glenn Rudebusch

Journal of Money, Credit and Banking, 2000, vol. 32, issue 4, 707-21

Abstract: One strategy for disinflation prescribes a deliberate path towards low inflation. A contrasting opportunistic approach eschews deliberate action and instead waits for unforeseen shocks to reduce inflation. This paper compares the ability of these two approaches to achieve disinflation--and at what cost. We analyze these issues using the Federal Reserves FRB/US model, which allows alternative assumptions to be made about expectations held by agents in the economy; hence, the credibility of the central bank can be considered in assessing the cost of deliberate and opportunistic disinflations.

Date: 2000
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Related works:
Working Paper: Opportunistic and deliberate disinflation under imperfect credibility (1998)
Working Paper: Opportunistic and deliberate disinflation under imperfect credibility (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:32:y:2000:i:4:p:707-21

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