Models of Inflation and the Costs of Disinflation
Guy M Meredith,
Bankim Chadha and
Paul Masson ()
No 91/97, IMF Working Papers from International Monetary Fund
This paper focuses on the output costs of disinflation. A model of inflation with both forward and backward elements seems to characterize reality. Such an inflation model is estimated using data for industrial countries, and the output costs of a disinflation path are calculated, first analytically in a simple theoretical model, then by simulation of a global, multi-region empirical model. The credibility of a preannounced path for money consistent with the lowest output loss is considered. An alternative, more credible policy may be to announce an exchange rate peg to a low inflation currency.
Keywords: Inflation; money supply, money growth, inflation rate, rate of inflation (search for similar items in EconPapers)
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Chapter: Models of Inflation and the Costs of Disinflation (2019)
Journal Article: Models of Inflation and the Costs of Disinflation (1992)
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