Working Paper
Stopping inflations, big and small
Abstract: Previous studies of disinflation work with models in which firms use time-dependent strategies, changing nominal prices at intervals of fixed length. These models may be criticized for failing to allow pricing behavior to adjust after a large shift in policy regime. Consequently, this paper develops a model that allows firms to adopt strategies that are partially state-dependent, changing nominal prices whenever they deviate sufficiently from their target values. The paper uses this model to examine how the welfare costs and benefits of disinflation vary with the initial inflation rate and the speed of disinflation.
Keywords: Inflation (Finance);
Access Documents
File(s): File format is text/html http://www.richmondfed.org/publications/research/working_papers/1996/wp_96-1.cfm
File(s): File format is application/pdf http://www.richmondfed.org/publications/research/working_papers/1996/pdf/wp96-1.pdf
Authors
Bibliographic Information
Provider: Federal Reserve Bank of Richmond
Part of Series: Working Paper
Publication Date: 1996
Number: 96-01