Disinflation and the Supply Side

Agenor, Pierre-Richard ; Lodovico, Pizzati

World Bank, Washington, DC

关键词: ASSETS;    BORROWING;    CAPITAL ACCUMULATION;    CAPITAL GAINS;    CAPITAL GOODS;   

DOI  :  10.1596/1813-9450-2304
RP-ID  :  WPS2304

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The authors study the dynamics ofoutput, consumption, and real wages induced by adisinflation program based on permanent and temporaryreductions in the nominal devaluation rate. They use anintertemporal optimizing model of a small open economy inwhich domestic households face imperfect world capitalmarkets, the labor supply is endogenous, and wages areflexible. The model predicts that, with a constant capitalstock and no investment, there is an initial reduction inreal wages and output expands. Consumption falls on impactbut increases afterward. In addition, with a temporaryshock, a current account deficit emerges and, later arecession sets in, as documented in various studies. Withendogenous capital accumulation, numerical simulations showthat the model can also predict a boom in investment.