ASCARI, GUIDO; MERKL, CHRISTIAN - In: Journal of Money, Credit and Banking 41 (2009) 2-3, pp. 417-435
This paper analyzes the cost of disinflations under real wage rigidities in a micro-founded New Keynesian model. The conventional view is that real wage rigidities can be a useful mechanism to generate a slump in output after a credible disinflationary policy because they prevent the immediate...