What explains the widespread fear of deflation? This paper reviews the history of thought, economic history, and empirical evidence on deflation, with a view to answering this question. It also outlines informally the main effects of deflation in applied monetary models. The main finding is that -- for both historical and contemporary deflations -- there are many open, empirical questions that could be answered using the tools economists use to study inflation and monetary policy more generally.
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number
1086.