Should the dangers of deflation be dismissed?

Barry Eichengreen, Donghyun Park, Kwanho Shin

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Deflation has emerged as a concern for Asian policy makers. The traditional view is this concern is warranted – that deflation can lead to a vicious cycle of falling demand and prices, and is therefore a dangerous condition. However, another revisionist school of thought emphasizes the role of positive supply shocks in deflation and takes a more benign view of the phenomenon. In a recent paper, Borio et al. (2015) find some evidence which casts doubt on the traditional view. In this paper, we re-visit these findings using alternative measures of deflation. While we find some grounds for concern about the harmful effect of deflation on growth, our results also raise significant questions about the revisionist view.

Original languageEnglish
Pages (from-to)287-307
Number of pages21
JournalJournal of Macroeconomics
Volume52
DOIs
Publication statusPublished - 2017 Jun 1

Keywords

  • Deflation
  • Growth
  • Producer prices

ASJC Scopus subject areas

  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Should the dangers of deflation be dismissed?'. Together they form a unique fingerprint.

  • Cite this