Disinflation With Imperfect Credibility

Laurence Ball

No 3983, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents a theory of the real effects of disinflation. As in New Keynesian models, price adjustment is staggered across firms, As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised disinflation. The combination of imperfect credibility and staggering yields more plausible results than either of these assumptions alone. In particular, an announced disinflation reduces expected output if credibility is sufficiently low.

Date: 1992-02
Note: EFG ME
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Citations: View citations in EconPapers (4)

Published as Journal of Monetary Economics, December 1994.

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Journal Article: Disinflation with imperfect credibility (1995)
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