Deflation: Determinants, Risks, and Policy Options

By Taimur Baig, Jörg Decressin, Tarhan Feyzioglu, Manmohan S. Kumar, Chris Faulkner-MacDonagh

June 30, 2003

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Taimur Baig, Jörg Decressin, Tarhan Feyzioglu, Manmohan S. Kumar, and Chris Faulkner-MacDonagh. Deflation: Determinants, Risks, and Policy Options, (USA: International Monetary Fund, 2003) accessed November 21, 2024

Summary

Deflation can be costly and difficult to anticipate, and concerns of a generalized decline in prices in both industrial and emerging market economies have increased recently. This paper investigates the causes and consequences of deflation, the risk of deflation globally and in individual countries, and policy options. The authors discuss issues related to the measurement, determinants, and costs of deflation and examine previous episodes of deflation. They compute an index of deflation vulnerability, which they apply to the 35 largest industrial and emerging market economies. Finally, the paper offers several policy options for protecting against deflation and for coping with it should it strike.

Subject: Asset prices, Consumer prices, Deflation, Inflation, Output gap, Prices, Production, Stock markets

Keywords: Africa, Anti-deflation strategy, Asset prices, Consumer prices, Deflation, Deflation risk, Deflation vulnerability, Economy, Global, Gold standard, Inflation, Inflation target, Monetary policy, OP, Output gap, Persistent deflation, Price level target

Publication Details

Pages:

63
Volume:

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DOI:

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Issue:

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Series:

Occasional Paper No. 2003/003
Stock No:

S221EA
ISBN:

9781589062276
ISSN:

0251-6365

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