Exempel på disinflation

• For smaller disinflations, the qualitative results still hold; however, the scale of the output effects are smaller.

• To this end, the more debatable issue is how costly disinflations really are.

• Over an extended time, these short-term losses will not be as costly as a quick disinflation.

• More practically, the loss of credibility by the central bank will greatly reduce both the maximum achievable net output, and the optimal disinflation length.

• The resurgence of actual and prospective disinflation in industrialized countries has resulted in new interest in the possibility of self-fulfilling deflationary expectations.

• This paper analyzes exchange-rate dynamics following a money-based disinflation under different degrees of exchange-rate pass-through.

• As more firms are able to update their prices to reflect the disinflation, the money path overshoots the aggregate price level producing the boom.

• Recall that a disinflation implies a fall in the expected inflation rate and the nominal interest rate and therefore a rise in money demand.

• The costs of disinflation are immediate but transitory; the benefits of the disinflation are permanent but delayed.

• With a twoperiod disinflation, inflation inertia is less problematic: relative prices are closer to the profit-maximizing level if firms were allowed to continuously reset.

• Figure 2 shows that, in this case, optimal policy smooths the short-run costs over time by taking a gradual approach to disinflation.

• Again, we assume the announcement is fully credible and that the disinflation program is not known in advance. 22.

• To simulate a disinflation, it is necessary to derive starting values for the predetermined variables based on an initial inflationary steady state.

• In order to simulate a disinflation it is necessary to derive starting values for variables based on an initial inflationary steady state.

• As a result, welfare overall is higher under the gradualist disinflation.