The ex ante credibility of disinflation policy and the cost of reducing inflation

摘要

This paper contains an empirical study of the effects of credibility on the cost of disinflation. The analysis is based on a dataset composed of seventy-two disinflation episodes from 19 OECD countries. We measure the "ex ante credibility" of a disinflation episode as the probability of a successful disinflation conditional on economic and political factors known to private agents on the eve of the disinflation. Under a variety of empirical specifications we find that more credible disinflations areassociated with smaller losses in aggregate output.