EconPapers    
Economics at your fingertips  
 

Perils of price deflations: an analysis of the Great Depression

Charles Carlstrom and Timothy Fuerst

Economic Commentary, 2001, issue Feb

Abstract: If a central bank adopted a zero inflation target, it would, in practice, occasionally deviate up and down from that rate, and the economy would experience episodes of mild inflation and deflation. Is deflation-a decrease in the level of prices-a cause for concern? Deflation can cause output to decline, but to what extent? This Economic Commentary explores how much of a problem deflation might be for modern economies by estimating the effect of massive price declines on output during the Great Depression. The authors find that while deflation can cause output to decline, mild episodes of deflation are unlikely to be a problem.

Keywords: Deflation (Finance); Depressions (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.clevelandfed.org/~/media/content/newsr ... sion%20pdf.pdf?la=en Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcec:y:2001:i:feb15

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Economic Commentary from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().

 
Page updated 2019-07-11
Handle: RePEc:fip:fedcec:y:2001:i:feb15