Disinflation involves the conscious act of a monetary authority to change the prevailing expectations of private agents. The simulated costs of disinflation are compared with other estimates of sacrifice ratios. This paper also discusses disinflation, expectations, learning, macroeconomic modeling. For more information refer this white paper.
This paper reviews the existing theoretical and empirical literature addressing the benefits of low inflation. The ultimate goal is to arrive at a set of benefits in which a monetary authority can have genuine confidence. Moreover, what observable benefits do exist are unlikely to justify a policy of disinflation, even...
Credibility is key to the success of a disinflationary program. By reducing inflationary expectations, with its attendant impact on wage and price setting behavior, a fully credible policy, in principle, can deliver a sharp drop in inflation with limited output losses. This paper presents an empirical measure of disinflation credibility...
In recent years, inflation around the world has dropped to levels that, only two decades ago, seemed frustratingly unattainable. If one takes into account technical biases in the construction of the CPI and central banks' desire to maintain a small amount of padding to facilitate relative price adjustment and help...
Using a simple modern macroeconomic model, the paper argues that the real effects of the Volcker disinflation in the early 1980s were mainly due to imperfect credibility, evident in volatility and stubbornness of long-term interest rates. Studying recently released transcripts of the Federal Open Market Committee, it finds that Volcker...
This paper describes the model that are used as a laboratory for the comparison of the rules described above. It also compares the behavior of inflation and output under opportunistic and conventional linear policies. Using stochastic simulations of a small-scale rational expectation model, we study the cost and time required...
This paper compares the ability of these two approaches to achieve disinflation---and at what cost. We analyze these issues using the Federal Reserve's FRB/US model, which allows alternative assumptions to be made about expectations held by agents in the economy; hence, the credibility of the central bank can be considered...
This article will explore whether deflation is destined to simply remain a word in the dictionary or a word we will live with every day. Deflation is not the same thing as "disinflation," the latter of which is defined as a downward movement in inflated prices to a more...
Emerging economies are following the global trend of disinflation. In most developing countries, consumer prices are rising more slowly than they were five years ago. According to the IMF's latest World Economic Outlook, average consumer prices in Emerging economies are following the global...
This articles gives the details information regarding the inflation. It would seem obvious that low inflation is good for consumers, because costs are not rising faster than their paychecks. The only sure way to eliminate uncertainty is to have no inflation at all and that can only be...
The U.S. has a history of major inflation followed by massive deflation for the past 200 years. These inflationary periods were accompanied by increasing debt and rising inflation while the deflationary periods were associated with decreasing debt and interest rates. In between the inflation and deflation economy experienced periods of...
According to Hurriyet, Turkey's disinflation is not an idiosyncratic development, with an expected inflation rate this year of 8.95%, down slightly from a long-held estimate of 9.40%, and 6.50% expected in 2005, said a new report on the Turkish econo According to Hurriyet, Turkey's disinflation is...
The disinflation of the past two years has pushed the U.S. economy into relative price stability, generally defined as an inflation rate of between 1 percent and 2 percent. Price stability is a condition that some economists describe as inflation so low that it no longer affects people economic decisions....
In this article, it has been raised that whether deflation can be tamed or not. The apparent recession contained seeds of disinflation, in which price rises occur at a continually decreasing rate that quickly approaches zero. One of the major problems is the increase in the economy of the world....
There are far too many inadequate impressions about deflation going around. Disinflation, is described as a "planned reduction" in the general price level. Being destructive, both inflation and deflation are described as "sudden", laying off any blame upon misguided consumers. Many have found their curiosity about financial markets fully satisfied...
The Canadian economy is currently in transition from a period of disinflation to one with a very low and relatively stable inflation rate. Against this background, the author asks whether reduced-form parameters should be expected to be invariant to changes in the inflation process. It also explains two empirical issues....
This paper explores the theoretical foundations of a new approach to monetary policy. This paper relaxes some of the assumptions that are implicit in the simplest linear-quadratic model of the macroeconomy, and in so doing provides a partial rationale for the opportunistic approach. It contrasts the opportunistic approach to a...
Based on the observed behavior of monetary aggregates and exchange rates, this paper classifies inflation-stabilization episodes into two categories: de facto exchange rate-based stabilizations ERBS and non-ERBS. The paper concludes that empirical studies on the effects of exchange rate anchors must seek to disentangle the effects of their announcement from...
In common usage deflation is generally considered to be "falling prices". But there is much more to it than that. Often people confuse deflation with disinflation or with Depression (as in "the Great Depression"). These three terms are related but not synonymous. It explain about what are the causes...
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