EconPapers    
Economics at your fingertips  
 

Real wage rigidities and the cost of disinflations: A comment on Blanchard and Galí

Guido Ascari () and Christian Merkl

No 1312, Kiel Working Papers from Kiel Institute for the World Economy (IfW)

Abstract: This paper analyzes the cost of disinflation under real wage rigidities in a micro-founded New Keynesian model. Unlike Blanchard and Galí (2007) who carried out a similar analysis in a linearized framework, we take non- linearities into account. We show that the results change dramatically, both qualitatively and quantitatively, for the steady states and for the dynamic adjustment paths. In particular, a disinflation implies a prolonged slump without any need for real wage rigidities.

Keywords: Sticky Prices; Real Rigidities; Disinflation (search for similar items in EconPapers)
JEL-codes: E52 E31 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/3956/1/kap1312.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1312

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy (IfW) Contact information at EDIRC.
Series data maintained by ZBW - German National Library of Economics ().

 
Page updated 2017-09-29
Handle: RePEc:zbw:ifwkwp:1312