Who Pays for Disinflation?
نویسنده
چکیده
Many economic observers applaud the current rate of inflation in the United States, claiming that the rate is so low that inflation has ceased to matter much in the decisions of individuals and businesses. Some, such as Martin Feldstein (1997), want to see inflation fall still further--to zero--arguing that such a reduction would yield substantial gains by allowing resources to be allocated more efficiently. Feldstein advocates that the Federal Reserve engineer a recession that reduces real gross domestic product by 5 percent to wring inflation out of the economy. The problem with such a policy is that it would disproportionately burden those most at risk in our society--poorer families, minorities, and inner-city workers.
منابع مشابه
Wage Indexation, Central Bank Independence and the Cost of Disinflation
Recently, Fischer [1996] and Posen [1998] demonstrated empirically that countries with less independent central banks enjoy lower output losses during disinflationary cycles. Since independence is presume to provide a credibility bonus to the monetary policy, this conclusion looks surprising. To explain their paradoxical result, these authors put forward that independent central banks probably ...
متن کاملCommentary: Globalization and Global Disinflation
why the trend toward disinflation over the past two decades is so widespread. The paper is, in fact, an interesting diagnostic exercise in the spirit of an Agatha Christie play—say “Murder on the Orient Express” (or, given the number of possibilities, “And Then There Were None”). In the play, many suspects hated the victim; here, who killed “inflation”? How? Most interestingly, how does this pl...
متن کاملImperfectly Credible Disinflation under Endogenous Time-Dependent Pricing
The real effects of an imperfectly credible disinflation depend critically on the extent of price rigidity. In this paper, we examine how credibility affects the outcome of a disinflation in a model with endogenous time-dependent pricing rules. Both the endogenous initial degree of price rigidity and changes in the duration of price spells during disinflation play an important role in explainin...
متن کاملThe Opportunistic Approach to Disinflation*
This paper explores the theoretical foundations of a new approach to monetary policy. Proponents of this approach hold that when inflation is moderate but still above the long-run objective, the Fed should not take deliberate anti-inflation action, but rather should wait for external circumstances—such as favorable supply shocks and unforeseen recessions—to deliver the desired reduction in infl...
متن کاملDisinfiatior, with imperfect credibility
This paper presents a theory of the real effects of disinflation. As in New Kcyncsian models, price adjustment is staggered across firms. As in New Classical models. credihiltty is imperfect: the monetary authorrty may not complete a promised disinflation. The cwnbination of imperfect credibility and staggering yields more plausible results than 4ther of these assumptions alone. In particular. ...
متن کامل