Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/28757
Authors: 
Ascari, Guido
Merkl, Christian
Year of Publication: 
2007
Series/Report no.: 
Quaderni di Dipartimento, EPMQ, Università degli Studi di Pavia 191
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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