Nicolae, Anamaria; Nolan, Charles - In: Journal of Money, Credit and Banking 38 (2006) 1, pp. 47-66
In this paper we study the impact of a temporary lack of credibility in a transition to price stability. We quantify the effects of a period of disinflation on temporary output losses, and the impact of the lack of credibility on the optimal speed of disinflation. We demonstrate that the...