A discrete-time model with staggered price setting is shown to be flexible enough to analyze a variety of scenarios in which policymakers may introduce disinflation. While a recession need not necessarily occur, a semicredible disinflation (i.e., when price setters believe a new lower money...

When a firm and its workers try to agree now on contingent wages and employment at some future date, potential movements in several different prices enter into consideration. The firm's revenue depends on the selling price of its product. The workers have concerns about the price of the bundle...

When introducing a new monetary regime designed to reduce inflation, does a central bank prefer more or fewer economic agents who form informed forecasts of inflation? The relevance of the question arises because the central bank can make a decision about how much information to disseminate...

This paper examines whether rational, fully informed speculators will smooth exchange rates. Friedman's (1953) claim that they must do so is challenged, based on the exclusion of interest rate differentials from his interpretation of speculator behavior. Once one recognizes that interest rates...

International debt contracts can incorporate—at least implicitly—contingencies governing debt reduction. This paper examines a series of debt contracts that allow for the possibility of rescheduling, forgiveness, and rescheduling with forgiveness. The contract with both rescheduling and...