As economists came to accept the idea of a short-run but not a long-run trade-off between inflation and unemployment, the stage was set to ask about how much output is lost as a result of a disinflation
contribute to making gains from a disinflation
Recall the episode that I mentioned earlier in my remarks, about our concern over unwelcome disinflation
in 2003 and early 2004.
Chapter 9 by Wojciech Maliszewski studies the impact of central-bank independence on the disinflation
The sacrifice ratio typically refers to the output cost for a permanent decline in inflation during a disinflation
episode, whereas the benefice ratio typically refers to the output gain for a permanent rise in inflation during an episode of accelerating inflation.
The third great confiscation came during disinflation
An outcome of the Federal Reserve's tightening (most visible in the form of higher short-term interest rates) is that some industries tend to be impacted more than others by the disinflation
Consistent with the Schwartz Hypothesis, these episodes of increased banking losses and failure occurred in periods of disinflation
These implications suggest that a central bank faced with the task of disinflating from a high rate of inflation would want to provide substantial information about the new disinflation
policy at its inception and then gradually withdraw from public discussion as inflation declines.
Clearly with disinflation
being the theme, and most countries enjoying remarkable current account surpluses, and those being sustained, there is still marginal pressure for rates to come further down," Mr Eschweiler said.
As a consequence, we must be vigilant to the re-emergence of destabilizing influences--both higher inflation, and shortfalls in demand and decreases in some prices that would press the disinflation
process too far, too fast.
In New Zealand, the disinflation
during the four years prior to target adoption was accompanied by a period of sluggish GDP growth and, since 1988, rising unemployment.