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The Spectre Of Deflation: A Review Of Empirical Evidence

Author

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  • Gregor W. Smith

Abstract

What explains the widespread fear of deflation? This paper reviews thehistory of thought, economic history, and empirical evidence ondeflation, with a view to answering this question. It alsooutlines informally the main effects of deflation in appliedmonetary models. The main finding is that -- for both historicaland contemporary deflations -- there are many open, empiricalquestions that could be answered using the tools economists use tostudy inflation and monetary policy more generally.

Suggested Citation

  • Gregor W. Smith, 2006. "The Spectre Of Deflation: A Review Of Empirical Evidence," Working Paper 1086, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1086
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1086.pdf
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    Cited by:

    1. Nicolas Canry & Julien Fouquau & Sébastien Lechevalier, 2011. "Sectoral Price Dynamics in Japan: A Threshold Approach," Economics Bulletin, AccessEcon, vol. 31(2), pages 1322-1335.
    2. Bill Dorval & Gregor W. Smith, 2015. "Interwar Inflation, Unexpected Inflation, and Output Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1599-1615, December.
    3. Douglas Silveira & Ricardo B. L. M. Oscar, 2024. "Inflation Targeting Regimes in Emerging Market Economies: To Invest or Not to Invest?," Computational Economics, Springer;Society for Computational Economics, vol. 64(4), pages 2097-2129, October.
    4. Robert Amano & Thomas J. Carter & Rhys R. Mendes, 2016. "Comparing Forward Guidance and Neo-Fisherianism as Strategies for Escaping Liquidity Traps," Staff Analytical Notes 16-16, Bank of Canada.
    5. Ryan Niladri Banerjee & Aaron Mehrotra, 2018. "Deflation expectations," BIS Working Papers 699, Bank for International Settlements.
    6. Lukáš Kovanda & Martin Komrska, 2017. "Deflace, odklad spotřeby a hospodářské krize: rétorika centrálních bank vs. ekonomická literatura [Deflation and Economic Crisis: Central Banks' Rhetoric vs. Economic Literature]," Politická ekonomie, Prague University of Economics and Business, vol. 2017(3), pages 351-369.
    7. Kevin Clinton & Roberto Garcia-Saltos & Marianne Johnson & Ondrej Kamenik & Douglas Laxton, 2010. "International Deflation Risks under Alternative Macroeconomic Policies," NBER Chapters, in: Sticky Prices and Inflation Dynamics (NBER-TCER-CEPR), pages 140-177, National Bureau of Economic Research, Inc.
    8. James Yetman, 2009. "Hong Kong Consumer Prices are Flexible," Working Papers 052009, Hong Kong Institute for Monetary Research.
    9. Robert W. Dimand, 2011. "Lessons from the 1929 Crash and the 1930s Debt Deflation: What Bernanke and King Learned, and What They Could Have Learned," Chapters, in: Claude Gnos & Louis-Philippe Rochon (ed.), Credit, Money and Macroeconomic Policy, chapter 2, Edward Elgar Publishing.
    10. Pierre St-Amant & David Tessier, 2008. "Déflation et politique monétaire," L'Actualité Economique, Société Canadienne de Science Economique, vol. 84(3), pages 307-323, September.
    11. Claudio Borio & Magdalena Erdem & Andrew Filardo & Boris Hofmann, 2015. "The costs of deflations: a historical perspective," BIS Quarterly Review, Bank for International Settlements, March.

    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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