From Chronic Inflation to Chronic Deflation: Focusing on Expectations and Liquidity Disarray Since WWII

Guillermo Calvo

No 22535, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The paper discusses policy relevant models, going from (1) chronic inflation in the 20th century after WWII, to (2) credit sudden stop episodes that got exacerbated in Developed Market economies after the 2008 Lehman crisis, and appear to be associated with chronic deflation. The discussion highlights the importance of expectations and liquidity, and warns about the risks of relegating liquidity to a secondary role, as has been the practice in mainstream macro models prior to the Great Recession.

JEL-codes: E31 E41 E42 E44 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe, nep-mac and nep-mon
Note: IFM ME
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Citations: View citations in EconPapers (5)

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