Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/28757 
Year of Publication: 
2007
Series/Report no.: 
Quaderni di Dipartimento - EPMQ No. 191
Publisher: 
Università degli Studi di Pavia, Dipartimento di Economia Politica e Metodi Quantitativi (EPMQ), Pavia
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: 
E31
E50
Document Type: 
Working Paper

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