A Simple Model of Disinflation (Prosty Model Dezinflacji) (Polish)

Abstract

This paper presents the simple model of the disinflation, being located in a mainstream of economics and based on the traditional view that nominal rigidity don't allow for fast reducing the rate of inflation. These rigidities cause costs in the form of the transitional growth of the unemployment rate and fluctuation of the rate of growth of the production. The principle of the exchangeability of the inflation and unemployment is the main point of the presented model. It results from it that periodic slowing down the rate of growth of the production is needed in order permanently to lower the inflation rate, because prices and wages don’t accommodate themselves immediately to the reduced money supply.

Note: downloadable document is in Polish

Keywords: Monetary policy, Inflation, unemloyment, wage rigidity

JEL Classification: E31, E52