Clarifying the debate about deflation concerns

Mickey Levy 21 February 2014

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A common theme among many economic policymakers, financial market participants, and the media is that rich industrialised nations face a high risk of deflation, and that deflation always harms economic performance and so must be combatted with aggressive macroeconomic stimulus. Such broad assessments are misleading, and under certain circumstances may lead to misguided policies. More clarity on the topic is required.

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Topics:  Global crisis Monetary policy

Tags:  eurozone, US, Europe, Japan, deflation, disinflation, quantitative easing

Is the Phillips curve alive and well after all? Inflation expectations and the missing disinflation

Olivier Coibion, Yuriy Gorodnichenko 15 November 2013

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“Prior to the recent deep worldwide recession, macroeconomists of all schools took a negative relation between slack and declining inflation as an axiom. Few seem to have awakened to the recent experience as a contradiction to the axiom.” (Bob Hall, 2013.)

“The surprise [about inflation] is that it’s fallen so little, given the depth and duration of the recent downturn. Based on the experience of past severe recessions, I would have expected inflation to fall by twice as much as it has.” (John Williams, 2010.)

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Topics:  Global crisis Monetary policy

Tags:  inflation, Phillips curve, expectations, oil, global crisis, disinflation, Great Recession

Deflation or disinflation?

Robert Ophèle 11 February 2009

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Inflation refers to a sustained increase in the general price level in an economy. It is not an instantaneous shock limited to the prices of certain goods. It is a persistent and general process. Inflation is fuelled by expectations – when workers and companies expect prices to rise, they adjust upwards their prices and wages accordingly.

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Topics:  Monetary policy

Tags:  France, deflation, disinflation

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