Is deflation costly after all? The perils of erroneous historical classifications
Bibliographic Data
| ID | 21653562 |
|---|---|
| Authors | Daniel Kaufmann (0000-0003-3260-0660, University of Neuchâtel and KOF Swiss Economic Institute Neuchâtel Switzerland, corresponding author) |
| Year | 2020 |
| Volume | 35 |
| Issue | 5 |
| Pages | 614-628 |
| Publication date | 2020-08-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Applied Econometrics (JOURNAL) |
| Journal identifiers | ISSN: 1099-1255 • E-ISSN: 0883-7252 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1002/jae.2762 |
| OpenAlex | W2761910963 |
| Language | EN |
| Citations received | 1 |
| References cited | 34 |
I estimate average economic activity during periods of inflation and deflation while accounting for measurement errors in 19th century prices. These measurement errors lead to underestimation (overestimation) of economic activity during periods of inflation (deflation). By exploiting multiple deflation indicators, it is possible to recover the true relationship; the shortfall of US industrial production growth during periods of deflation ranges from −4.5 pp to −7.6 pp, instead of −2 pp. I also find a negative relationship between deflation and real activity in the UK. I then examine the cross‐country variation in the estimates for eleven countries. The patterns are consistent with stronger biases for countries with more serious measurement errors in prices
Deflation · Econometrics · Economics · Keynesian economics · Monetary policy · Economic theories and models · Global Financial Crisis and Policies · Monetary Policy and Economic Impact
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| Citations per year | 1 |
|---|---|
| Citation span | 2025 - 2025 (1) |
| Highly cited | No |