The Risk of Deflation

White Paper No. 4, 2009

Stefan Gerlach
Research Area:
Macro Finance
Apr 2009
deflation, monetary policy, fiscal policy

A particular risk at present is that the rapid decline in inflation in many countries in recent months will turn into deflation with highly adverse real economic developments. This background paper considers how large the risk of deflation may be and discusses what policy can do to reduce it.

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