Successful vs. Failed Disinflations: An Event Study

Anna Cole and Christopher Neely

Review, 2026, vol. 108, issue 3, 26 pages

Abstract: The U.S. did not experience large decreases in production or employment during the disinflation of 2022-2024. To put this unusually costless disinflation in context, this article characterizes the behavior of economic variables from more than 100 disinflation episodes in OECD countries. We decompose these episodes into those that successfully reduced inflation over several years, those in which inflation substantially rebounded, and the most recent episodes of 2022-2024. Successful episodes show several differences in comparison to failed episodes, including lower real interest rates and higher stock prices. The recent disinflations of 2022-2024 sometimes resemble successful episodes, but with essentially no average output loss. By characterizing the behavior of recent episodes, as well as historical disinflations with differing outcomes, we create a set of stylized facts to guide analysis of disinflation policies.

Keywords: disinflation; production; labor markets; Organisation for Economic Co-operation and Development (OECD); interest rates; equity prices (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlrv:102985

DOI: 10.20955/r.2026.03

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