Credible Disinflation with Staggered Price Setting
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NBER Working Paper No. 3555*
Issued in December 1990
NBER Program(s): EFG
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 economies.
*Published:
American Economic Review, March 1994
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