AbstractThis paper shows that announced credible disinflations under inflation targeting lead to a boom in a standard New Keynesian model (i.e. a disinflationary boom). This finding is robust with respect to various parameterizations and disinflationary experiments. Thus, it differs from previous findings about disinflationary booms under monetary targeting.
KeywordsDisinflation, Disinflationary Boom, Inflation Targeting
JEL classificationE30, E31