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Board of Governors of the Federal Reserve System (U.S.)
Finance and Economics Discussion Series
Opportunistic and deliberate disinflation under imperfect credibility
Antulio N. Bomfim
Glenn D. Rudebusch
One strategy for disinflation prescribes a deliberate path towards low inflation. A contrasting opportunistic approach eschews deliberate action and instead waits for unforeseen shocks to reduce inflation. This paper compares the ability of these two approaches to achieve disinflation---and at what cost. We analyze these issues using the Federal Reserve's FRB/US model, which allows alternative assumptions to be made about expectations held by agents in the economy; hence, the credibility of the central bank can be considered in assessing the cost of deliberate and opportunistic disinflations.

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Bibliographic information
Antulio N. Bomfim & Glenn D. Rudebusch, Opportunistic and deliberate disinflation under imperfect credibility, Finance and Economics Discussion Series 1998-01, Board of Governors of the Federal Reserve System (U.S.), 1998.
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Keywords: Inflation (Finance)
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