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2 edition of Credible disinflation with staggered price setting found in the catalog.

Credible disinflation with staggered price setting

Laurence M. Ball

Credible disinflation with staggered price setting

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  • 15 Currently reading

Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

    Subjects:
  • Inflation (Finance) -- Government policy -- Mathematical models.,
  • Prices -- Mathematical models.

  • Edition Notes

    StatementLaurence Ball.
    SeriesNBER working papers series -- working paper no. 3555, Working paper series (National Bureau of Economic Research) -- working paper no. 3555.
    ContributionsNational Bureau of Economic Research.
    The Physical Object
    Pagination27, [2] p. :
    Number of Pages27
    ID Numbers
    Open LibraryOL22438221M

    part of the government to a credible disinflation program. In this literature, the costless disinflation result extends to a world of. staggered wage contracts with forward-looking expectations. Stopping. inflation is then a matter of a resolute commitment on the part of the. government to a credible disinflation program.   Staggered wages and output dynamics under disinflation Staggered wages and output dynamics under disinflation Ascari, Guido; Rankin, Neil We study the output costs of a reduction in monetary growth in a dynamic general equilibrium model with staggered wages. The money wage is fixed for two periods, and is chosen according to intertemporal optimisation. In this paper I present the historical, theoretical and empirical background of DSGE models. I show that the fundament of these models lies in optimizing agents framework and argue which impulses fueled the development of DSGE models. BALL, L. (). Credible Disinflation with Staggered Price Setting. American Economic Review, 84(1), pp. Peter G. McGregor has written: 'Finance constraints, Keynes' Finance Motive for liquidity and monetary theory' 'An introduction to the Keynesian-Monetarist debate in an open-economy context.

    Start studying Chapter 16 Book Notes (Econ Exam 4). Learn vocabulary, terms, and more with flashcards, games, and other study tools. - goes best when the central bank has some degree of credibility in its attempt to set things right. Deflation. A decrease in prices, that is, a negative inflation rate. - a _ disinflation reduces the.


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Credible disinflation with staggered price setting by Laurence M. Ball Download PDF EPUB FB2

Credible Disinflation with Staggered Price-Setting By LAURENCE BALL* Although most macroeconomists agree that disinflations reduce output, there is no consensus about why. New classical economists argue that credibility problems are central-that disinflation would be cost-less if the public believed policy announce-ments.

Many new Keynesians, by contrast. Credible disinflation with staggered price setting. Cambridge, MA: National Bureau of Economic Research, [] (OCoLC) Material Type: Internet resource: Document Type: Book, Internet Resource: All Authors / Contributors: Laurence M Ball; National Bureau of Economic Research.

This paper determines the real effects of Credible disinflation with staggered price setting book disinflation when price setting is staggered.

Credible disinflation with staggered price setting book results are surprising: a fairly quick disinflation causes a boom. This finding suggests that nominal price rigidity alone does not explain why disinflation is costly in actual economies. This paper determines the real effects of credible disinflation when price setting is staggered.

The results are surprising: a fairly quick disinflation causes a boom. This finding suggests that nominal price rigidity alone does not explain why disinflation is costly in actual by: This paper determines the real effects of credible disinflation when price setting is staggered.

The results are surprising: a fairly quick disinflation causes a boom. This finding suggests that nominal price rigidity alone does not explain Credible disinflation with staggered price setting book disinflation is costly in actual economies. (This abstract was borrowed from another version of this item.).

Working Paper: Credible Disinflation with Staggered Price Setting () This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/TextCited by: Downloadable. Author(s): Laurence Ball. Abstract: This paper determines the real effects of credible disinflation when price setting is staggered.

The Credible disinflation with staggered price setting book are surprising: a fairly quick disinflation causes a boom.

This finding suggests that nominal price rigidity alone does not explain why disinflation is costly in actual economies. Abstract: Credible Disinflation with Staggered Price-Setting Although most macroeconomists agree that disinflations reduce output, there is no consensus about why.

New classical economists argue that credibility problems are central-that disinflation would be cost- less if the public believed policy announce- ments.

A discrete-time model with staggered price setting is shown to be flexible enough to analyze a variety of scenarios in which policymakers may introduce disinflation. While a recession need not necessarily Credible disinflation with staggered price setting book, a semicredible disinflation (i.e., when price setters believe a new lower.

part of the government to a credible disinflation program. In this literature, the costless disinflation result extends to a world of staggered wage contracts with forward-looking expectations. Stopping inflation is then a matter of a Credible disinflation with staggered price setting book commitment on the part of the government to a credible disinflation program.

This paper presents a theory of the real effects of disinflation. As in New Keynesian models, price adjustment iis staggered across firms. As in New Classical models, credibility is imperfect: the monetary authority may not complete a promised by: Staggered nominal contracts • If nominal contracts are set over multi-year periods then credible disinflation will still cause a recession.

• Intuition: nominal wage growth determined by expectations prior to policy change. • Disinflation produces reduction in prices greater than reduction in nominal Size: KB.

In j − 1, the prices set in j − 1 are greater then 0 (the aggregate price) and the prices set in j − 2 are less than zero. At the beginning of the disinflation, in period j, only those prices set in j − 2 are modified.

The index of the other, unmodified prices is greater than p Cited by: 6. Abstract We develop a model of optimizing forward-looking staggered price setting where even fully credible disinflations display a delayed and gradual inflation response and significant output. Now suppose that there are two groups of staggered price setters.

Half the firms set prices at the beginning of periods t, t + 2, t + 4, and the other half set prices at the beginning of periods t - 1, t + 1, t + 3, Once prices are set, they stay fixed for two periods. Download PDF: Sorry, we are unable to provide the full text but you may find it at the following location(s): ?si (external link)Author: Laurence Ball.

Abstract. 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 by: Ch.

Staggered Price and Wage Setting in Macroeconomics the models have proved useful to macroeconomists doing applied econometrics and policy work. I then go on to explore the microeconomic foundations for these models, discussing several intriguing puzzles and their possible resolutions.

Credible Disinflation with Staggered Price Setting’, (). Disinflation Dynamics in an Open Economy General Equilibrium Model’, unpublished paper,Author: John Fender and Neil Rankin.

Ball L. b Credible disinflation with staggered price setting. American Economic Rev – Ball L. Disinflation with imperfect : Aaron L.

Jackson. Moreover, credible disinflation induces a gradual decline in inflation and a fall in output as observed during the Volcker disinflation era. Keywords: Staggered Price Setting; Trend inflation; Smoothed-Off Kink in Demand Curve; Fixed Production Cost; Monetary Policy Shock; Credible Author: Takushi Kurozumi, Willem Van Zandweghe.

disinflation fails to be welfare-improving when lost seigniorage revenues must be replaced using other distortionary taxes. Section 6 asks whether their result carries over to the environment with staggered price setting.

Finally, Section 7 concludes. A model of staggered price setting. not, however, been concerned with the disinflation question. Danziger () and Ireland () do look at disinflation in dynamic general equilibrium models with staggered prices. Danziger () investigates the welfare effects of unanticipated disinflation in a model where it is costly to change prices.

On the (Non)Equivalence of Money- and Exchange-Rate-Based Disinflation John Fender (University of Birmingham, UK) and Neil Rankin (University of Warwick, UK) and credible. Indeed, disinflation policies may sometimes be introduced when institutional staggered price setting, and a tradeables-nontradeables structure.

The Genesis of Inflation and the Costs of Disinflation NBER Working Papers, National Bureau of Economic Research, Inc View citations (40) See also Journal Article in Journal of Money, Credit and Banking () Credible Disinflation with Staggered Price Setting NBER Working Papers, National Bureau of Economic Research, Inc View citations (20).

Wage-price 42 While current inflation rate is associated with the stabilizing effects of full indexation from monetary disturbances (Gray, ;Fischer, ), indexation to the already observed. Inflation Inertia and Credible Disinflation - The Open Economy Case Guillermo Calvo, Oya Celasun, Michael Kumhof.

NBER Working Paper No. Issued in March NBER Program(s):International Finance and Macroeconomics This paper develops a model of inflation inertia based on optimizing forward looking staggered price setting in a small open by: ECONOMICS A READING LIST Textbook: David Romer, Advanced Macroeconomics, Third Edition "Staggered Wage Setting in a Macro Model," American Economic Review Supply Rate," Journal of Political Economy, Februarypp.

Laurence Ball, "Credible Disinflation with Staggered Price Setting," American Economic Review, March,   The demand curves induce strategic complementarity in price setting and thus generate inflation persistence under positive trend inflation through the effect on inflation dynamics of a measure of price dispersion, which differs from relative price distortion.

We also show that credible disinflation leads to a gradual decline in inflation and a Author: Takushi Kurozumi, Willem Van Zandweghe.

We present a simple disequilibrium model of an economy in transition, which enables analysis of dynamic interrelations between interest rates, inflation, money and output. L., “Credible Disinflation with Staggered Price Setting”, unpublished manuscript, Princeton University (April ).

Buy this book on publisher's site; Reprints Author: Krzysztof Cichocki, Tomasz Szapiro. This article analyses the dynamics of an NK model with two firms’ price‐setting mechanisms: the Rotemberg () quadratic cost of price adjustment and the staggered price setting introduced by Calvo ().

The conventional wisdom is to consider these two models as observationally equivalent, because they deliver the same log‐linear by: Under nonzero trend inflation, the variable elasticity generates intrinsic persistence in inflation through a measure of price dispersion stemming from staggered price setting.

It also introduces intrinsic persistence in wage inflation under staggered wage setting, which affects price : Takushi Kurozumi, Willem Van Zandweghe. setting.3 We show that forward-looking wage setting can explain a boom under ERB disinflation even in the absence of additional factors such as lack of credibility.4 Our aim in the present paper is the analytical one of dissecting the forces at work in these two common types of disinflation policy using a simple qualitative model.

We study a. Sticky Prices in the Euro Area: A Summary of New Micro-Evidence. Journal of the European Economic Association, 4(), pp.

ANGELONI, I., et al. Laurence Ball: current contact information and listing of economic research of this author provided by RePEc/IDEAS/CitEc. This paper proposes a more general definition of loss avoidance, relates it to fairness and applies it to the labor market. By influencing judgments about what is a fair wage readjustment, it can lead to coordination failures, generating downward nominal wage rigidity (DNWR) and disinflation costs even with common knowledge of credible policies.

I show that staggered adjustment in theory should not impede the response of inflation to such a policy. If disinflation is "credible"--if it is announced in advance, and price setters believe the announcement--then inflation should fall quickly without lower output. (Indeed, I can show that, in theory, disinflation raises output.).

04/08/20 Advanced Monetary Economics | University of Nottingham Ningbo China Article Disinflation (3 items) Staggered wages and output dynamics under disinflation - Guido Ascari, Neil Rankin, Article Credible Disinflation with Staggered Price-Setting. - Ball, Laurence, Article What Determines the Sacrifice Ratio.

- Ball, L Chapter. A Calvo contract is the name given in macroeconomics to the pricing model that when a firm sets a nominal price there is a constant probability that a firm might be able to reset its price which is independent of the time since the price was last reset.

The model was first put forward by Guillermo Calvo in his article "Staggered Prices in a Utility-Maximizing Framework". 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 lation occurs when the increase in the “consumer price level” slows down from the previous period when the prices were rising.

"Credible Disinflation with Staggered Pdf Setting," American Economic Review, Marchpp. "Asymmetric Price Adjustment and Economic Fluctuations" (with N. Gregory Mankiw), Economic Journal, Marchpp. "What Determines the Sacrifice Ratio?" in N.

G. Mankiw (ed.), Monetary Policy, University of Chicago Press,pp File Size: 42KB.Price Fixing A practice whereby all competitors in download pdf industry agree to charge the same price for their competing products.

Price fixing deprives consumers of the fair market price for the products because the fixers can simply raise and lower prices at will. Most economists (with objectivists being a major exception) believe price fixing to be anti.of staggered price setting are isolated by comparing the optimal monetary policy found ebook with the immediate disinflation called for by the flexible-price models.

The next section outlines the model of staggered price setting. Section 3 then defines and characterizes the model economy's equilibrium.