Models of Inflation and the Costs of Disinflation
Author | : Mr.Bankim Chadha |
Publisher | : International Monetary Fund |
Total Pages | : 34 |
Release | : 1991-10-01 |
ISBN-10 | : 9781451949483 |
ISBN-13 | : 1451949480 |
Rating | : 4/5 (480 Downloads) |
Download or read book Models of Inflation and the Costs of Disinflation written by Mr.Bankim Chadha and published by International Monetary Fund. This book was released on 1991-10-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.