What Determines the Short-run Output-Inflation Trade-off?

Working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 23 July 1996

Working Paper No. 53
By Anthony Yates and Bryan Chapple

This paper examines the robustness of the findings of Ball, Mankiw and Romer (1988) that the inflation-output trade-off is higher at lower rates of inflation. Using a cross-section of 43 countries we find that this result is indeed quite robust to a number of different experiments. We also use this data to infer whether faster disinflations are more or less costly than slow ones. We find that 'gradualism', or slow disinflation, does not pay, in common with other research in the literature.

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