Deflation and Economic Crisis
Central Banks' Rhetoric vs. Economic Literature
Bibliographic Data
| ID | 6109121 |
|---|---|
| Authors | Lukáš Kovanda (President University), Martin Komrska (President University) |
| Year | 2017 |
| Volume | 65 |
| Issue | 3 |
| Pages | 351-369 |
| Publication date | 2017-06-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Politická ekonomie (JOURNAL) |
| Journal identifiers | ISSN: 0032-3233 • E-ISSN: 2336-8225 |
| Publisher | Prague University of Economics and Business (PUBLISHER • CZ) |
| DOI | 10.18267/j.polek.1148 |
| OpenAlex | W2727374850 |
| Language | EN |
| Citations received | 1 |
| References cited | 34 |
The aim of this paper is to show that the current anti-deflationary rhetoric of central banks lacks adequate support from the economic literature. Based on pure theory, there might be both positive and negative effects of deflation on economic development. The historical record is, if anything, also ambiguous. As recent literature reveals, a substantial number of deflationary periods were accompanied by robust economic growth. The two frequently mentioned examples of dismal deflationary periods - the Great Depression in the United States and the lost decades in Japan - seem to be exceptions. Taking into account the arguments presented in this paper, we argue that central banks should revise their communication strategy. If there is a need to defend easy monetary policy, the main argument should be based, dominantly, on the divergence of forecasted inflation from the inflation target, with a much lesser emphasis on the need to avoid the allegedly destructive effect of deflation
Argument (complex analysis) · Central bank · Deflation · Depression (economics) · Economics · Great Depression · Inflation (cosmology) · Keynesian economics · Linguistics · Macroeconomics · Monetary economics · Monetary policy · Political science · Rhetoric · Economic Theory and Policy · Global Financial Crisis and Policies · Law · Monetary Policy and Economic Impact · Philosophy
| Citations per year | 0.17 |
|---|---|
| Citation span | 2020 - 2020 (1) |
| Highly cited | No |