Optimal Inflation Cost and Benefits of Disinflation PDF Download

Author: Ewa Dzwonik-Wróbel
Publisher:
ISBN:
Category : Deflation (Finance)
Languages : en
Pages : 19

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Author: Tor Einarsson
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Traditional comparisons of the welfare costs of inflation across economies that differ only by the mean inflation rate understate these welfare costs by ignoring the stochastic elements in the economy. Moreover, these comparisons do not reflect realistic policy choices to, say, either maintain the status quo or disinflate, since they also ignore the transition. In a monetary version of the Uzawa (1965) - Lucas (1988) model of endogenous growth, it is shown that accounting for the transitional dynamics in these calculations increases the estimated benefits of disinflation. Moreover, the optimal response to a credible, rapid disinflation policy includes temporary declines in employment and output, with the former exhibiting a significant degree of persistence. These temporary declines in employment and output are not associated with any rigidities in the economy, and therefore do not represent dead-weight losses that occur along the transition path. They are instead a reflection of the low initial human capital stock that the household wishes to build up rapidly in order to enhance long-run growth.

Author: Leonardo Leiderman
Publisher: University of Chicago Press
ISBN: 9780226471105
Category : Business & Economics
Languages : en
Pages : 364

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During the early 1980s, Israel's inflation rate rose to almost 500% per year—one of the highest inflation rates in the developed world. In 1985, the Israeli government implemented a program that immediately reduced inflation to 15%-20%, where it remained for the rest of the decade. How did the economy deal with these major changes so rapidly and successfully? In these eighteen articles, Leonardo Leiderman discusses why the Israeli plan worked and considers how other countries might benefit from similar policies. Even though standard economic models predict that output will drop and unemployment will rise during disinflation, Israel saw a boom in private consumption and large increases in real wages that lasted for about three years. To understand how the effects of Israeli disinflation policies defied typical expectations, Leiderman investigates how monetary fiscal policy determined Israel's runaway inflation and how the country brought its economy abruptly under control. He finds that rates of inflation and consumption depend on the public's expectations about future fiscal adjustments and that foreign trade shocks do not inevitably lead to a long-term rise in the inflation rate. His illumination of international trade and domestic policies, past and present, will interest academic economists and policymakers alike.

Author: Guillermo A. Calvo
Publisher:
ISBN:
Category : Deflation (Finance)
Languages : en
Pages : 52

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This paper develops a model of inflation inertia based on optimizing forward looking staggered price setting in a small open economy. Unlike in current models of sticky prices, transitions to a lower steady state inflation rate take time even if they are fully credible, and they are associated with significant output losses. There is a welfare trade-off between these output losses and the gains from smaller inflationary distortions. For reasonable parameter values inflation stabilization improves welfare. The optimal steady state is reached at the Friedman rule. Technical appendices are available at www.nber.org/data-appendix/w9557/ inert-techapp.pdf.

Author: Martin Feldstein
Publisher: University of Chicago Press
ISBN: 0226241769
Category : Business & Economics
Languages : en
Pages : 374

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In recent years, the Federal Reserve and central banks worldwide have enjoyed remarkable success in their battle against inflation. The challenge now confronting the Fed and its counterparts is how to proceed in this newly benign economic environment: Should monetary policy seek to maintain a rate of low-level inflation or eliminate inflation altogether in an effort to attain full price stability? In a seminal article published in 1997, Martin Feldstein developed a framework for calculating the gains in economic welfare that might result from a move from a low level of inflation to full price stability. The present volume extends that analysis, focusing on the likely costs and benefits of achieving price stability not only in the United States, but in Germany, Spain, and the United Kingdom as well. The results show that even small changes in already low inflation rates can have a substantial impact on the economic performance of different countries, and that variations in national tax rules can affect the level of gain from disinflation.

Author: Gian Maria Milesi-Ferretti
Publisher:
ISBN:
Category : Deflation (Finance)
Languages : en
Pages : 48

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Author: Fouad Sabry
Publisher: One Billion Knowledgeable
ISBN:
Category : Business & Economics
Languages : en
Pages : 335

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What is Disinflation Disinflation is a decrease in the rate of inflation - a slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time. It is the opposite of reflation. How you will benefit (I) Insights, and validations about the following topics: Chapter 1: Disinflation Chapter 2: Macroeconomics Chapter 3: Recession Chapter 4: Inflation Chapter 5: Monetarism Chapter 6: Deflation Chapter 7: Monetary policy Chapter 8: Causes of the Great Depression Chapter 9: Price stability Chapter 10: Long Depression Chapter 11: Neutrality of money Chapter 12: Reflation Chapter 13: Friedman rule Chapter 14: Inflation targeting Chapter 15: Indexed unit of account Chapter 16: Deleveraging Chapter 17: Depression of 1920-1921 Chapter 18: Constant purchasing power accounting Chapter 19: Monetary policy of the Philippines Chapter 20: Abenomics Chapter 21: Hyperinflation in the Federal Republic of Yugoslavia (II) Answering the public top questions about disinflation. (III) Real world examples for the usage of disinflation in many fields. Who this book is for Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Disinflation.

Author: Christina D. Romer
Publisher: University of Chicago Press
ISBN: 0226724832
Category : Business & Economics
Languages : en
Pages : 434

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While there is ample evidence that high inflation is harmful, little is known about how best to reduce inflation or how far it should be reduced. In this volume, sixteen distinguished economists analyze the appropriateness of low inflation as a goal for monetary policy and discuss possible strategies for reducing inflation. Section I discusses the consequences of inflation. These papers analyze inflation's impact on the tax system, labor market flexibility, equilibrium unemployment, and the public's sense of well-being. Section II considers the obstacles facing central bankers in achieving low inflation. These papers study the precision of estimates of equilibrium unemployment, the sources of the high inflation of the 1970s, and the use of non-traditional indicators in policy formation. The papers in section III consider how institutions can be designed to promote successful monetary policy, and the importance of institutions to the performance of policy in the United States, Germany, and other countries. This timely volume should be read by anyone who studies or conducts monetary policy.

Author: J. L. Whitwell
Publisher:
ISBN:
Category : Inflation (Finance)
Languages : en
Pages : 32

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Author: Daniel Leigh
Publisher:
ISBN:
Category : Deflation (Finance)
Languages : en
Pages : 142

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