than they are for most OECD countries.
Theoretically, positive surprises should raise output just as negative surprises reduce it; announced disinflations
should not reduce output on average.
The differing patterns among these various measures suggest that comparisons between the 2010 disinflation
and today's disinflation
might benefit from digging into the details.
In the published model, strong expectations anchoring leads to muted disinflation
This paper's empirical method allows us to measure the sacrifice ratio as the costs of a deliberate disinflation
policy in contrast to, for example, the output costs of a series of negative cost push shocks.
for each country are identified as follows.
With results similar to ours, Balvers and Cosimano (1994) find that rapid disinflation
is preferred when inflation is high, although in their framework rapid reduction in money growth is warranted to facilitate learning.
If we think of the period as six months, then fully credible disinflations
spread out over a year or more will not have negative output effects.
8 The timing and extent of disinflation
were, of course, always somewhat uncertain, and some financial distress did occur during postwar disinflations
THE CONTROL OF INFLATION: DISINFLATION
IN THE 1980s
Rudiger Dornbusch "Italy: The Real Effects of Inflation and Disinflation
," in Economic Policy -- A European Forum 8.
In other words, disinflations
of the 1970s and 1980s were less