Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/3956
Authors: 
Ascari, Guido
Merkl, Christian
Year of Publication: 
2007
Series/Report no.: 
Kiel Working Paper 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: 
Sticky Prices
Real Rigidities
Disinflation
JEL: 
E52
E31
Document Type: 
Working Paper

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