Skip to main content

Imperfectly Credible Disinflation under Endogenous Time-Dependent Pricing

Buy Article:

$43.00 plus tax (Refund Policy)

The real effects of an imperfectly credible disinflation depend critically on the extent of price rigidity. We examine this interaction in a model with endogenous time-dependent pricing. Both the endogenous initial degree of price rigidity and changes in the duration of price spells during disinflation are important in explaining the effects of imperfect credibility. We initially consider a setup where the degree of credibility is fixed and then allow agents to update beliefs about the “type” of monetary authority that they face. In both cases, the interaction between endogeneity of pricing behavior and imperfect credibility increases the output costs of disinflation.
No References
No Citations
No Supplementary Data
No Article Media
No Metrics

Keywords: E31; E52; credibility; disinflation; endogenous time-dependent pricing; optimal price setting

Document Type: Research Article

Affiliations: 1: Marco Bonomo is an Associate Professor at the Graduate School of Economics, Getulio Vargas Foundation (  )., Email: [email protected] 2: Carlos Carvalho is an Economist at the Federal Reserve Bank of New York (  )., Email: [email protected]

Publication date: 01 August 2010

  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more