Disinflation in a DSGE Perspective: Sacrifice Ratio or Welfare Gain Ratio?

Guido Ascari and Tiziano Ropele

No 111, Quaderni di Dipartimento from University of Pavia, Department of Economics and Quantitative Methods

Abstract: When used to examine disinflation monetary policies, the current workhorse dynamic stochastic general equilibrium model of business cycle fluctuations is able to quantitatively account for the main stylized facts in terms of recessionary effects and sacrifice ratio. We complement the transitional analysis of the short-run costs with a rigorous welfare evaluation and show that, despite the long-lasting economic downturn, disinflation entails non-zero overall welfare gains.

Keywords: Disinflation; Sacrifice ratio; Non-linearities (search for similar items in EconPapers)
JEL-codes: E31 E5 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-03
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Related works:
Journal Article: Disinflation in a DSGE perspective: Sacrifice ratio or welfare gain ratio? (2012)
Working Paper: Disinflation in a DSGE perspective: sacrifice ratio or welfare gain ratio? (2009)
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