Low Inflation, Deflation, and Policies for Future Price Stability
AbstractThe effects of three different inflationary environments--high inflation, low inflation, and negative inflation--on real output stability are examined by looking at the experiences of Japan and the United States during the last 30 years. I begin by going back to see how things looked from the vantage point of the 1987 international conference at the Bank of Japan. Next I trace out how economic performance has evolved since then. Economic performance appears to have been better with low inflation than with either high inflation or negative inflation. I also look at some of the reasons for the different inflationary environments. I take both an interest rate policy rule approach and a quantity theory of money approach. Both approaches suggest that monetary policy has been the key factor in generating the different inflationary experiences.
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Bibliographic InfoArticle provided by Institute for Monetary and Economic Studies, Bank of Japan in its journal Monetary and Economic Studies.
Volume (Year): 19 (2001)
Issue (Month): S1 (February)
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Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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