Moderate Inflation and the Deflation-Depression Link

Jess Benhabib and Mark Spiegel

Journal of Money, Credit and Banking, 2009, vol. 41, issue 4, 787-798

Abstract: Recent research has concluded that the historical evidence only provides weak support for the contention that deflation episodes are harmful to economic growth. In this paper, we revisit this relationship by allowing for inflation and growth to have a nonlinear specification dependent on inflation levels. In particular, we allow for the possibility that high inflation is negatively correlated with growth, while a positive relationship exists over the range of negative to moderate inflation. Our results confirm a positive relationship between inflation and growth at moderate inflation levels, and support the contention that the relationship between inflation and growth is nonlinear over the entire sample range. Copyright (c) 2009 The Ohio State University.

Date: 2009
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Related works:
Journal Article: Moderate Inflation and the Deflation–Depression Link (2009)
Working Paper: Moderate inflation and the deflation-depression link (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:41:y:2009:i:4:p:787-798

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