Abstract: One strategy for disinflation prescribes a deliberate path towards
low inflation. A contrasting opportunistic approach eschews
deliberate action and instead waits for unforeseen shocks to reduce
inflation. 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 in assessing the cost of deliberate and opportunistic
disinflations.
Keywords: Monetary policy, inflation expectations, policy rules, inflation targets
Full paper (156 KB PDF)
| Full paper (223 KB Postscript)
Home | Economic research and data | FR working papers | FEDS | 1998 FEDS papers
Accessibility
To comment on this site, please fill out our feedback form.
Last update: January 16, 1998
|