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Supply-Side Effects of Disinflation Programs

1994-07-01 Business & Economics
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Release : 1994-07-01
Genre : Business & Economics
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Book Rating : 425/5 ( reviews)

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Book Synopsis Supply-Side Effects of Disinflation Programs by : Mr.Jorge Roldos

Download or read book Supply-Side Effects of Disinflation Programs written by Mr.Jorge Roldos. This book was released on 1994-07-01. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the short-run and long-run supply-side effects of disinflation programs in a two-sector economy. Fixing the exchange rate reduces the wedge between the return on foreign assets and that on domestic capital, leading to an increase in the latter. After an initial real exchange rate appreciation and increase in the production of nontradables—due to a consumption boom—the new capital is gradually installed in the tradable sector. During this transitional period, further real appreciation takes place—as the expansion of the tradable sector pulls labor away from the nontradable sector—together with investment-driven deficits in the current account. We conclude that when appreciation and deficits are due to supply-side rigidities, rather than to credibility and/or price stickiness, no further policies (i.e., capital controls, incomes policies) are advisable.

Supply-Side Effects of Disinflation Programs

2006
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Release : 2006
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Book Synopsis Supply-Side Effects of Disinflation Programs by : Jorge Roldós

Download or read book Supply-Side Effects of Disinflation Programs written by Jorge Roldós. This book was released on 2006. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the short-run and long-run supply-side effects of disinflation programs in a two-sector economy. Fixing the exchange rate reduces the wedge between the return on foreign assets and that on domestic capital, leading to an increase in the latter. After an initial real exchange rate appreciation and increase in the production of nontradables--due to a consumption boom--the new capital is gradually installed in the tradable sector. During this transitional period, further real appreciation takes place--as the expansion of the tradable sector pulls labor away from the nontradable sector--together with investment-driven deficits in the current account. We conclude that when appreciation and deficits are due to supply-side rigidities, rather than to credibility and/or price stickiness, no further policies (i.e., capital controls, incomes policies) are advisable.

Disinflation and the Supply Side

2016
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Release : 2016
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Book Synopsis Disinflation and the Supply Side by : Lodovico Pizzati

Download or read book Disinflation and the Supply Side written by Lodovico Pizzati. This book was released on 2016. Available in PDF, EPUB and Kindle. Book excerpt: What role do supply-side factors play in the dynamics of output and absorption in exchange rate-based stabilization programs?AgEnor and Pizzati study the dynamics of output, consumption, and real wages induced by a disinflation program based on permanent and temporary reductions in the nominal devaluation rate.They use an intertemporal optimizing model of a small open economy in which domestic households face imperfect world capital markets, the labor supply is endogenous, and wages are flexible.The model predicts that, with a constant capital stock and no investment, there is an initial reduction in real wages and output expands. Consumption falls on impact but increases afterward.In addition, with a temporary shock, a current account deficit emerges and, later, a recession sets in, as documented in various studies.With endogenous capital accumulation, numerical simulations show that the model can also predict a boom in investment.This paper is a product of the Economic Policy and Poverty Reduction Division, World Bank Institute. The authors may be contacted at [email protected] and [email protected].

Disinflation and the Supply Side

2000 Aggregate Demand
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Release : 2000
Genre : Aggregate Demand
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Book Rating : 525/5 ( reviews)

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Book Synopsis Disinflation and the Supply Side by : Pierre-Richard Agénor

Download or read book Disinflation and the Supply Side written by Pierre-Richard Agénor. This book was released on 2000. Available in PDF, EPUB and Kindle. Book excerpt: What role do supply-side factors play in the dynamics of output and absorption in exchange rate-based stabilization programs?

Fiscal Balance During Inflation, Disinflation, and Immigration

1996-04 Business & Economics
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Release : 1996-04
Genre : Business & Economics
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Book Synopsis Fiscal Balance During Inflation, Disinflation, and Immigration by : Assaf Razin

Download or read book Fiscal Balance During Inflation, Disinflation, and Immigration written by Assaf Razin. This book was released on 1996-04. Available in PDF, EPUB and Kindle. Book excerpt: The paper provides an overview of the role of the fiscal imbalances and the ensuing public debt in explaining major episodes in Israel’s recent economic developments. The main conclusions from the Israeli budgetary developments may have more general validity: (a) deficits lead to inflation and stopping inflation requires elimination of deficits; (b) a major effect of inflation is a large shift of the tax burden from capital to labor; and (c) shocks to labor supply, such as massive labor inflow through immigration, can be absorbed without worsening government finances, when the labor and the housing markets are sufficiently flexible.

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