Stopping inflations, big and small

Peter Ireland

No 96-01, Working Paper from Federal Reserve Bank of Richmond

Abstract: Previous studies of disinflation work with models in which firms use time-dependent strategies, changing nominal prices at intervals of fixed length. These models may be criticized for failing to allow pricing behavior to adjust after a large shift in policy regime. Consequently, this paper develops a model that allows firms to adopt strategies that are partially state-dependent, changing nominal prices whenever they deviate sufficiently from their target values. The paper uses this model to examine how the welfare costs and benefits of disinflation vary with the initial inflation rate and the speed of disinflation.

Keywords: Inflation; (Finance) (search for similar items in EconPapers)
Date: 1996
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Stopping inflations, big and small (1997)
Journal Article: Stopping Inflations, Big and Small (1997)
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