Dangers of Deflation

Publication | December 2002

Recently, there has been growing concern about deflation in some countries and the possibility of deflation at the global level. Aggregate demand, output, and employment could stagnate or decline, particularly where debt levels are already high. Standard economic policy stimuli could become less effective, while few policymakers have experience in preventing or halting deflation with alternative means.

Contents 

  • Causes and Consequences of Deflation
  • Historical Examples
  • Deflation Prospects
  • Policy Responses
  • Conclusions
  • References