TY  - UNPD
A1  - Bordo, Michael
A1  - Erceg, Christopher
A1  - Levin, Andrew
A1  - Michaels, Ryan
T1  - Three great american disinflations
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2007,05
N2  - In this paper, we examine three famous episodes of deliberate deflation (or disinflation) in U.S. history, including episodes following the Civil War, World War I, and the Volcker disinflation of the early 1980s. These episodes were associated with widely divergent effects on the real economy, which we attribute both to differences in the policy actions undertaken, and to the transparency and credibility of the monetary authorities. We attempt to account for the salient features of each episode within the context of a stylized DSGE model. Our model simulations indicate how a more predictable policy of gradual deflation could have helped avoid the sharp post-WWI depression. But our analysis also suggests that the strong argument for gradualism under a transparent monetary regime becomes less persuasive if the monetary authority lacks credibility; in this case, an aggressive policy stance (as under Volcker) can play a useful signalling role by making a policy shift more apparent to private agents. JEL Classification: E31, E32, E52
T3  - CFS working paper series - 2007, 05 
KW  - DSGE Model
KW  - credibility
KW  - deflation
KW  - USA
KW  - Deflation
KW  - Geschichte 1866-1879
KW  - Geschichte 1920-1922
KW  - Geschichte 1979-1983
Y1  - 2007
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/1621
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-38146
N1  - November 24, 2006
IS  - November 24, 2006
ER  -