Arbeitspapier
Credible disinflation and delayed slumps under real wage rigidity
The paper studies the effects of credible disinflation in the presence of real wage rigidity, comparing the Calvo and Rotemberg price setting mechanisms (the two popular variants of the New-Keynesian model). In both types of models, a credible, gradual disinflation is shown to lead to a delayed slump in output along the transition path. The delayed-slump result is novel and owes to negative real wage growth along the transition path, whose effect is amplified by the degree of real wage rigidity.
- Sprache
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Englisch
- Erschienen in
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Series: Kiel Working Paper ; No. 1923
Price Level; Inflation; Deflation
Monetary Policy, Central Banking, and the Supply of Money and Credit: General
real wage rigidity
disinflation
nonlinear dynamics
- Handle
- Letzte Aktualisierung
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12.07.2024, 13:21 MESZ
Objekttyp
- Arbeitspapier
Beteiligte
- Tesfaselassie, Mewael
- Kiel Institute for the World Economy (IfW)
Entstanden
- 2014