Costs and Benefits of an Anti-Inflationary Policy: Questions and Issues
@article{Buiter1983CostsAB, title={Costs and Benefits of an Anti-Inflationary Policy: Questions and Issues}, author={Willem H. Buiter and Marcus Miller}, journal={NBER Working Paper Series}, year={1983} }
This paper analyses how the output or unemployment cost of achieving a sustainable reduction in the rate of inflation depends on the structure of the wage-price process and how the "sacrifice ratio" can be minimized. In models where the natural rate is invariant under the anti-inflationary policies, price level inertia is not sufficient for a positive sacrifice ratio. Without sluggishness in the core inflation rate, a zero sacrifice ratio can be achieved simply through intelligent demand…
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