شاخص بندی، متناوب و کاهش تورم

Since high inflation makes very frequent price adjustments desirable, costs of taking optimal price decisions may become high, and indexation may emerge as an economical rule of thumb to update prices between optimal adjustments. We introduce indexation in a model of staggered price setting, where individual prices, when not adjusted by inflation, are set optimally. We show that it is more difficult to disinflate in a model with indexation than in a standard fixed price staggering model: the costs associated with a given path of money disinflation are higher and the time necessary to stabilize an inflationary economy while keeping output at its natural level is about three times longer. As a consequence, the paper explains why disinflation may be more difficult in high inflation economies.