What Determines the Short-Run Output-Inflation Trade-Off?

Abstract

Using post-war data on 43 countries, this paper shows that the finding that the trade-off between inflation and output falls as inflation rises is quite robust. The implication is that the real effects of monetary policy might be greater as the economy moves towards price stability. The paper also looks at whether economies should approach price stability quickly or slowly and finds, in common with other research, that fast disinflations tend to cost less in terms of lost output.