Kiel Working Papers, Kiel Institute for World Economics
No 1499:
Disinflation in a DSGE Perspective: Sacrifice Ratio or Welfare Gain Ratio?
Guido Ascari and Tiziano Ropele
Abstract: When taken to examine disinflation monetary policies, the
current workhorse DSGE model of business cycle fluctuations successfully
accounts for the main stylized facts in terms of recessionary effects and
sacrifice ratio. We complement the transitional analysis of the short-run
costs with a rigorous welfare evaluation and show that, despite the
long-lasting economic downturn, disinflation entails non-zero overall
welfare gains
Keywords: Disinflation, Sacrifice ratio, Non-linearities; (follow links to similar papers)
JEL-Codes: E31,; E5; (follow links to similar papers)
31 pages, March 2009
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