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Title:Real wage rigidities and the cost of disinflations: A comment on Blanchard and Galí PDF Logo
Authors:Ascari, Guido
Merkl, Christian
Issue Date:2007
Citation:[Series:] Kiel working paper [Editor:] Institut für Weltwirtschaft, Kiel [No.:] 1312
Series/Report no.:Kieler Arbeitspapiere 1312
Abstract:This paper analyzes the cost of disinflation under real wage rigidities in a micro-founded New Keynesian model. Unlike Blanchard and Galí (2007) who carried out a similar analysis in a linearized framework, we take non- linearities into account. We show that the results change dramatically, both qualitatively and quantitatively, for the steady states and for the dynamic adjustment paths. In particular, a disinflation implies a prolonged slump without any need for real wage rigidities.
Subjects:Disinflation
Sticky Prices
Real Rigidities
JEL:E52
E31
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW
Kieler Arbeitspapiere, IfW

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