We analyse the behaviour of an economy characterized by staggered pricing, with price contracts either specified in nominal terms (Taylor, 1980), or in real terms (Fuhrer and Moore, 1995). We focus on the response of these models to a permanent and unexpected disinflation policy. It is advanced...

We extend the analysis of Ball (2000) on near-rational expectations. We show that near-rational expectations imply nontrivial additional forecast errors and the degree of error depends on the monetary regime. Moreover, this scheme of expectations does not by itself give support to the New...