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THEORETICAL APPROACHES TO MONETARY DISINFLATION
Author(s) -
Dalziel Paul C.
Publication year - 1991
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.1991.tb00139.x
Subject(s) - disinflation , economics , keynesian economics , monetarism , inflation (cosmology) , monetary policy , recession , new keynesian economics , macroeconomics , monetary economics , physics , theoretical physics
. During the 1980s many countries adopted tight monetary policies to reduce high inflation rates which were the legacy of the 1970s. As inflation threatens to rise at the beginning of this decade, this paper provides a survey of the 1980s literature which sought to provide theoretical understandings of how monetary disinflation is achieved. Four models are presented—monetarist, neo‐Keynesian, new classical and post‐Keynesian. Each model's explanation of the recession which accompanies the monetary disinflation is outlined, as well as possible policy measures to reduce the extent of the recession and to hasten the return to full employment.