Opportunistic and deliberate disinflation under imperfect credibility

Antulio Bomfim and Glenn Rudebusch

No 97-07, Working Papers in Applied Economic Theory from Federal Reserve Bank of San Francisco

Abstract: On 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 Reserve's 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 disinflation.

Keywords: Inflation (Finance); Monetary policy; Banks and banking, Central; Monetary policy - United States (search for similar items in EconPapers)
Date: 1997
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Related works:
Journal Article: Opportunistic and Deliberate Disinflation under Imperfect Credibility (2000)
Working Paper: Opportunistic and deliberate disinflation under imperfect credibility (1998)
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