Effects of deflation

ФЕДЕРАЛЬНОЕ АГЕНТСТВО ПО ОБРАЗОВАНИЮ
Государственное образовательноеучреждение
Высшего профессионального образования
РОССИЙСКИЙ ГОСУДАРСТВЕННЫЙ ГУМАНИТАРНЫЙУНИВЕРСИТЕТ
ИНСТИТУТ ЭКОНОМИКИ, УПРАВЛЕНИЯ ИПРАВА
ФАКУЛЬТЕТ МЕНЕДЖМЕНТ ОРГАНИЗАЦИИ
«DEFLATION»
Реферат
по предмету:  АНГЛИЙСКИЙ ЯЗЫК
1-го курса заочной формыобучения
Тула, 2010

Content
1. Introduction
2. Causes and corresponding types of deflation
2.1 Money supply side deflation
2.2 Credit deflation
2.3 Scarcity of official money
3. Effects of deflation
3. Effects of deflation
4. Alternative causes and effects
4.1 The Austrian school of economics
4.2 Keynesian economics
5. Historical examples
5.1 In Ireland
5.2 In Japan
4.3 In the United States
6. Conclusion
7. References
1. Introduction
Deflation is a persistent fall in some generallyfollowed aggregate indicator of price movements, such as the consumer price indexor the GDP deflator. Generally, a one-time fall in the price level does not constitutea deflation. Instead, one has to see continuously falling prices for well over ayear before concluding that the economy suffers from deflation. How long the fallhas to continue before the public and policy makers conclude that the phenomenonis reflected in expectations of future price developments is open to question. Forexample, in Japan, which has the distinction of experiencing the longest post WorldWar II period of deflation, it took several years for deflationary expectationsto emerge.
In economics, deflation is a decrease in thegeneral price level of goods and services. Deflation occurs when the annual inflationrate falls below 0% — a negative inflation rate [1]. This should not be confusedwith disinflation, a slow-down in the inflation rate. Inflation reduces the realvalue of money over time; conversely, deflation increases the real value of money- the currency of a national or regional economy. This allows one to buy more goodswith the same amount of money over time.
Most observers tend to focus on changes in consumeror producer prices since, as far as monetary policy is concerned, central banksare responsible for ensuring some form of price stability, usually defined as inflationrates of +3% or less in much of the industrial world. However, sustained decreasesin asset prices, such as for stock market shares or housing, can also pose seriouseconomic problems since, other things equal, such outcomes imply lower wealth and,in turn, reduced consumption spending. While the connection between goods priceand asset price inflation or deflation remains a contentious one in the economicsprofession, policy makers are undoubtedly worried about the existence of a link[2].
2. Causes and corresponding types ofdeflation
In the Investment and Saving equilibrium andMoney Supply equilibrium model, deflation is caused by a shift in the supply-and-demandcurve for goods and services, particularly a fall in the aggregate level of demand.That is, there is a fall in how much the whole economy is willing to buy and thegoing price for goods. Because the price of goods is falling, consumers have anincentive to delay purchases and consumption until prices fall further, which inturn reduces overall economic activity. Since these idles the productive capacity,investment also falls, leading to further reductions in aggregate demand. This isthe deflationary spiral. An answer to falling aggregate demand is stimulus, eitherfrom the central bank, by expanding the money supply, or by the fiscal authorityto increase demand, and to borrow at interest rates which are below those availableto private entities.
In more recent economic thinking, deflationis related to risk: where the risk-adjusted return on assets drops to negative,investors and buyers will hoard currency rather than invest it, even in the mostsolid of securities [5]. This can produce a liquidity trap. A central bank cannot,normally, charge negative interest for money, and even charging zero interest oftenproduces less simulative effect than slightly higher rates of interest. In a closedeconomy, this is because charging zero interest also means having zero return ongovernment securities, or even negative return on short maturities. In an open economyit creates a carry trade, and devalues the currency. A devalued currency producedhigher prices for imports without necessarily stimulating exports to a like degree.
In monetarist theory, deflation must be associatedwith either a reduction in the money supply, a reduction in the velocity of moneyor an increase in the number of transactions. But any of these may occur separatelywithout deflation. It may be attributed to a dramatic contraction of the money supply,or to adhere to a gold standard or other external monetary base requirement.
However, deflation is the natural conditionof hard currency economies when the supply of money is not increased as much aspositive population growth and economic growth. When this happens, the availableamount of hard currency per person falls, in effect making money scarcer; and consequently,the purchasing power of each unit of currency increases. Deflation occurs when improvementsin production efficiency lower the overall price of goods competition in the marketplaceoften prompts those producers to apply at least some portion of these cost savingsinto reducing the asking price for their goods. When this happens, consumers payless for those goods; and consequently deflation has occurred, since purchasingpower has increased.
Rising productivity and reduced transportationcost created structural deflation during the peak productivity era of from 1870-1900,but there was mild inflation for about a decade before the establishment of theFederal Reserve in 1913. There was inflation during World War I, but deflation returnedagain after that war and during the 1930s depression. Most nations abandoned thegold standard in the 1930s. There is less reason to expect deflation, aside fromthe collapse of speculative asset classes, under a fiat monetary system with lowproductivity growth.
In mainstream economics, deflation may be causedby a combination of the supply and demand for goods and the supply and demand formoney, specifically the supply of money going down and the supply of goods goingup. Historic episodes of deflation have often been associated with the supply ofgoods going up without an increase in the supply of money, or the demand for goodsgoing down combined with a decrease in the money supply. Studies of the Great Depressionby Ben Bernanke have indicated that, in response to decreased demand, the FederalReserve of the time decreased the money supply, hence contributing to deflation.
Demand-side causes are:
Growth deflation: an enduring decrease in thereal cost of goods and services resulting in competitive price cuts.
A structural deflation existed from 1870s untilthe end of the gold standard in the 1930s based on a decrease in the productionand distribution costs of goods. It resulted in competitive price cuts when marketswere oversupplied. By contrast, under a fiat monetary system, there was high productivitygrowth from the end of World War II until the 1960s, but no deflation [6].
Productivity and deflation are discussed ina 1940 study by the Brookings Institution that gives productivity by major US industries from 1919 to 1939, along with real and nominal wages. Persistent deflation wasclearly understood as being the result of the enormous gains in productivity ofthe period [7]. By the late 1920s, most goods were over supplied, which contributedto high unemployment during the Great Depression [8].
Cash building deflation: attempts to save morecash by a reduction in consumption leading to a decrease in velocity of money.
Supply-side causes are:
Bank credit deflation: a decrease in the bankcredit supply due to bank failures or increased perceived risk of defaults by privateentities or a contraction of the money supply by the central bank.
 2.1 Money supply side deflation
From a monetarist perspective, deflation iscaused primarily by a reduction in the velocity of money or the amount of moneysupply per person.
A historical analysis of money velocity andmonetary base shows an inverse correlation: for a given percentage decrease in themonetary base the result is nearly equal percentage increase in money velocity[10]. This is to be expected because monetary base (MB), velocity of base money(VB), price level (P) and real output (Y) are related by definition: MB*VB = P*Y.However, it is important to note that the monetary base is a much narrower definitionof money than M2 money supply. Additionally, the velocity of the monetary base isinterest rate sensitive, the highest velocity being at the highest interest rates[10].
Changes in money supply have historically takena long time to show up in the price level, with a rule of thumb lag of at least18 months. Bonds, equities and commodities have been suggested as reservoirs forbuffering changes in money supply [13].
 2.2 Credit deflation
In modern credit-based economies, a deflationaryspiral may be caused by the central bank initiating higher interest rates, therebypossibly popping an asset bubble. In a credit-based economy, a fall in money supplyleads to markedly less lending, with a further sharp fall in money supply, and aconsequent sharp fall-off in demand for goods. The fall in demand causes a fallin prices as a supply glut develops. This becomes a deflationary spiral when pricesfall below the costs of financing production. Businesses, unable to make enoughprofit no matter how low they set prices, are then liquidated. Banks get assetswhich have fallen dramatically in value since their mortgage loan was made, andif they sell those assets, they further glut supply, which only exacerbates thesituation. To slow or halt the deflationary spiral, banks will often withhold collectingon non-performing loans. This is often no more than a stop-gap measure, becausethey must then restrict credit, since they do not have money to lend, which furtherreduces demand, and so on.
 2.3 Scarcity of official money
When structural deflation appeared in the yearsfollowing 1870, a common explanation given by various government inquiry committeeswas a scarcity of gold and silver; although they usually mentioned the changes inindustry and trade we now call productivity. However, David A. Wells (1890) wellsnotes that the U. S. money supply during the period 1879-1889 actually rose 60%,the increase being in gold and silver, which rose against the percentage of nationalbank and legal tender notes. Furthermore, Wells argued that the deflation only loweredthe cost of goods that benefited from recent improved methods of manufacturing andtransportation. Goods produced by craftsmen did not decrease in price, nor did manyservices, and the cost of labor actually increased. Also, deflation did not occurin countries that did not have modern manufacturing, transportation and communications[14].
In economies with an unstable currency, barterand other alternate currency arrangements such as dollarization are common, andtherefore when the 'official' money becomes scarce, commerce can still continue(e.g., most recently in Zimbabwe). Since in such economies the central governmentis often unable, even if it were willing, to adequately control the internal economy,there is no pressing need for individuals to acquire official currency except topay for imported goods. In effect, barter acts as protective tariff in such economies,encouraging local consumption of local production. It also acts as a spur to miningand exploration, because one easy way to make money in such an economy is to digit out of the ground. 
/>3. Effects of deflation
The effects of deflation are:
Decreasing nominal prices for goods and services
Increasing real value of cash money and allmonetary items
Discourages bank savings and decreases investment
Enriches creditors at the expenses of debtors
Benefits fixed-income earners
Recessions and unemployment
Deflation is generally regarded negatively,as it causes a transfer of wealth from borrowers and holders of illiquid assets,to the benefit of savers and of holders of liquid assets and currency. In this senseit is the opposite of inflation, which is similar to taxing currency holders andlenders and using the proceeds to subsidize borrowers. Thus inflation may encourageshort term consumption. In modern economies, deflation is usually caused by a dropin aggregate demand, and is associated with recession and more rarely long termeconomic depressions.
While an increase in the purchasing power ofone's money sounds beneficial, it amplifies the sting of debt. This is because aftersome period of significant deflation, the payments one is making in the serviceof a debt represent a larger amount of purchasing power than they did when the debtwas first incurred. Consequently, deflation can be thought of as a phantom amplificationof a loan's interest rate. If, as during the Great Depression in the United States,deflation averages 10% per year, even a 0% loan is unattractive as it must be repaidwith money worth 10% more each year. Under normal conditions, the Fed and most othercentral banks implement policy by setting a target for a short-term interest rate- the overnight federal funds rate in the US — and enforcing that target by buyingand selling securities in open capital markets. When the short-term interest ratehits zero, the central bank can no longer ease policy by lowering its usual interest-ratetarget.
In recent times, as loan terms have grown inlength and loan financing is common among many types of investments, the costs ofdeflation to borrowers have grown larger. Deflation discourages investment and spending,because there is no reason to risk on future profits when the expectation of profitsmay be negative and the expectation of future prices is lower. Consequently deflationgenerally leads to, or is associated with a collapse in aggregate demand. Withoutthe «hidden risk of inflation», it may become more prudent just to holdon to money, and not to spend or invest it.
Hard money advocates argue that if there wereno «rigidities» in an economy, then deflation should be a welcome effect,as the lowering of prices would allow more of the economy's effort to be moved toother areas of activity, thus increasing the total output of the economy.
Deflation has effects on two main levels: onthe corporate and on the governmental level.
The most obvious is on the level of companies.By definition, in the event of a deflation, Companies not only cannot raise, buthave to actually decrease their prices for their products and services. If theyhadn’t decreased their prices, they would go out of business. Although in a deflationaryenvironment, most likely their production costs also decrease, most majority ofcompanies’ profit decrease also, and after a few years they are going to annuallosses (there may be companies in sectors with low competition and high profitabilityratios, such as utilities, and also companies that have a large portion of profitscoming from either foreign operations or from exports). In such scenarios companiescannot plan for and invest in its future growth and development.
When governments want to maintain or increasethe real value of their tax income in a deflationary economy, one of three options:increase the tax base, increase tax rates, or a combination of the above two.
Tax base is the number of people and companiesthat pay taxes. Due to the consumption and corporate environment governments haveto be very careful with broadening the tax base, but especially cautious with increasingtaxes, as it may cause the economy to sink more deeply into a recession (deflationaryeconomies are also shrinking ones).
Some wages: as companies cannot afford to increasewages, the nominal value of those wages stays the same (however, their real valueincreases) not only for the period of deflation, but also for some time during thefollowing stagflation and inflationary period.
Deflationary economies have many indirect socio-,political-, financial-, and economical effects:
Rising unemployment: as companies need to cutcost, they need to fire employees, which are not producing (because they don’t haveany work to do).
Higher government deficits: as most costs staythe same (for political reasons), and some expenditures increase (e.g.: rising unemploymentaid payments cost of jumpstarting the economy).
Recession: no price increase; no economic growth.
More expensive imports: same foreign currencyis worth more domestic currency.
More income from exports: same foreign currencyincome is worth more in domestic currency.
4. Alternative causes and effects4.1 The Austrian school of economics
The Austrian school defines deflation and inflationsolely in relation to the money supply. Deflation is therefore defined to be a contractionof the money supply. Only a decrease in money supply can cause a general fall inprices.
Increased productivity, however, can appearto cause deflation; but it is not general deflation; as the price of produced goodsfalls, while labor rates remain constant. Austrians show this as a benefit of soundmoney, which increases or decreases very little in total supply. Prices should simplyconfer the exchange ratio between any two goods in an economy. Increased productivitygenerally means less labor for more goods, whereas increased money supply shouldmean the same amount of labor for the same amount of goods.
For instance if there is a fixed money supplyof 400 kg of gold in an economy that produces 200 widgets, then one widget willcost 2 kg of gold. However, next year if output is 400 widgets with the same moneysupply of 400 kg of gold the price of each widget will drop to 1 kg of gold. In this case the general fall in price was caused by increased productivity.
The opposite of the above scenario has the sameeffect on prices, but a different cause. If there is a fixed money supply of 400 kg of gold in an economy that produces 200 widgets, then once again each widget will cost 2 kg of gold. However, if next year the money supply is cut in half to 200 kg of gold with the same output of 200 widgets, the price of each widget will now only be 1 kg of gold. When capital profits are dropping rapidly, there is no reason to invest gold, which breaksthe savings identity, and thus the automatic tendency of the economy to move backto equilibrium.
Austrians view increased productivity to bea good cause of a general fall in prices, while credit/money supply contractionas being a bad cause of a general fall in prices. Austrians also take the positionthat there are no negative distortions in the economy due to a general fall in pricesin the first scenario. However, in the second scenario where a general fall in pricesis caused by deflation, Austrians contend that this confers no benefit to society.For in this scenario wages will simply be cut in half and lower prices will notreflect a general increase in wealth.
Also, Austrians believe that some entity beingable to inflate or deflate a money supply is given a privilege, as all prices willnot change both simultaneously and proportionally. Rather price changes will occuras a response to what seems to be changes in demand, although this is only in nominalterms. Those who can inflate or deflate the money supply (or those closest to thissource) can take advantage of an otherwise unknown change in the money supply bymaking exchanges that appear sound in nominal terms, but actually confer more profitableexchange rates in real terms, once prices have adjusted to the change.
For example, if a widget costs 5g of gold todayand there is 20g of gold in the money supply, if the central bank decreases themoney supply to 10g, it can sell its widgets for the formerly agreed upon price.Once the market finds less overall demand, however, prices will halve. While thecentral banks' money supply deflation was the cause of the price decrease, it receiveddouble the money for its widgets that they are now worth in real terms.
 4.2 Keynesian economics
Keynesians insist on the distinction betweenconsuming goods and producing goods, and between government based and credit basedmoney supply.
For a given money supply, if wages rise fasterthan productivity, profits will fall and with them the price of producing goods(deflation), while consuming goods will rise (inflation). This happens in timeswhen labor supply is tight and bargaining power is strong. When wages rise slowerthan productivity, profits rise as do the prices of assets relative to consuminggoods. This can occur when labor supply is great and bargaining power is weak.
Inflation and deflation occur when the economicpolicies allow wages to increase or decrease at differing rates than productivity.Wages rising faster than productivity lead to inflation. Wages failing to increaseat the rate of productivity for protracted periods will ultimately cause deflation.
Indeed, if growth continues despite laggingwages, it is because of debt accumulation, producers lend to wage earning consumerspart of their profits, in order to sell their products. For protracted periods,there is a lot of endogenous money creation.
Then, when debt payments exceed the borrower'sability to pay, debt accumulation and endogenous money creation stops, demand andgoods' prices fall, manufacturers reduce production, employment falls, and fewerborrowers are thus able to pay their debts, and the cycle exacerbates.
Once preventive action has failed, Keynesiansadvocate corrective action. In case of debt deflation, Keynesians advocate«pump priming» or government creation of fiat money. As witnessed since 1990 in Japan, and in the 1930s in the USA, this policy is not very effective unlessgovernment creates employment via public works projects or military manufacturing.
Austrians and Keynesians agree on the idea thatthere are counterproductive cycles of booms and bust but while the former believethe government tends to be a cause of those cycles, the latter believe it is a meansto reduce the size of those cycles.
5. Historical examples/>5.1 In Ireland
In February 2009, Ireland's Central Statistics Office announced that during January 2009, the country experienceddeflation, with prices falling by 0.1% from the same time in 2008. This is the firsttime deflation has hit the Irish economy since 1960. Overall consumer prices decreasedby 1.7% in the month.
Brian Lenihan, Ireland's Minister for Finance,mentioned deflation in an interview with RTÉ Radio. According to RTÉ'saccount, «Minister for Finance Brian Lenihan has said that deflation must betaken into account when Budget cuts in child benefit, public sector pay and professionalfees are being considered. Mr Lenihan said month-on-month there has been a 6.6%decline in the cost of living this year» [9].
This interview is notable in that the deflationreferred to is not discernibly regarded negatively by the Minister in the interview.The Minister mentions the deflation as an item of data helpful to the argumentsfor a cut in certain benefits. The alleged economic harm caused by deflation isnot alluded to or mentioned by this member of government. This is a notable exampleof deflation in the modern era being discussed by a senior financial Minister withoutany mention of how it might be avoided, or whether it should be.
 />5.2 In Japan
Deflation started in the early 1990s. The Bankof Japan and the government tried to eliminate it by reducing interest rates, butthis was unsuccessful for over a decade. In July 2006, the zero-rate policy wasended.
Systemic reasons for deflation in Japan can be said to include:
Unfavorable demographics. Japan has an aging population: 22.6% over age 65 that is not growing and will soon start a longdecline. The Japanese death rate recently exceeded the birth rate [6].
Fallen asset prices. In the case of Japan asset price deflation was a mean reversion or correction back to the price level thatprevailed before the asset bubble. There was a rather large price bubble in equitiesand especially real estate in Japan in the 1980s [20].
Insolvent companies: Banks lent to companiesand individuals that invested in real estate. When real estate values dropped, theseloans could not be paid. The banks could try to collect on the collateral (land),but this wouldn't pay off the loan. Banks delayed that decision, hoping asset priceswould improve. These delays were allowed by national banking regulators. Some banksmade even more loans to these companies that are used to service the debt they alreadyhad. This continuing process is known as maintaining an «unrealized loss»,and until the assets are completely revalued and/or sold off, it will continue tobe a deflationary force in the economy. Improving bankruptcy law, land transferlaw, and tax law have been suggested (by The Economist) as methods to speed thisprocess and thus end the deflation.
Insolvent banks: Banks with a larger percentageof their loans which are «non-performing», that is to say, they are notreceiving payments on them, but have not yet written them off, cannot lend moremoney; they must increase their cash reserves to cover the bad loans.
Fear of insolvent banks: Japanese people areafraid that banks will collapse so they prefer to buy Treasury bonds instead ofsaving their money in a bank account. This likewise means the money is not availablefor lending and therefore economic growth. This means that the savings rate depressesconsumption, but does not appear in the economy in an efficient form to spur newinvestment. People also save by owning real estate, further slowing growth, sinceit inflates land prices.
Imported deflation: Japan imports Chinese and other countries' inexpensive consumable goods (due to lower wagesand fast growth in those countries) and inexpensive raw materials, many of whichreached all time real price minimums in the early 2000s. Thus, prices of importedproducts are decreasing. Domestic producers must match these prices in order toremain competitive. This decreases prices for many things in the economy, and thusis deflationary.
In November 2009 Japan has returned to deflation,according to the Wall Street Journal. Bloomberg L.P. reports that consumer pricesfell in October 2009 by a near record 2.2% [20].
 />4.3 Inthe United States
There have been three significant periods ofdeflation in the United States.
The first was the recession of the late 1830s,following the Panic of 1837, when the currency in the United States contracted by about 30%, a contraction which is only matched by the Great Depression.This «deflation» satisfies both definitions, that of a decrease in pricesand a decrease in the available quantity of money.
The second was after the Civil War, sometimescalled The Great Deflation. It was possibly spurred by return to a gold standard,retiring paper money printed during the Civil War.
«The Great Sag of 1873-96 could be nearthe top of the list. Its scope was global. It featured cost-cutting and productivity-enhancingtechnologies. It flummoxed the experts with its persistence, and it resisted attemptsby politicians to understand it, let alone reverse it. It delivered a generation’sworth of rising bond prices, as well as the usual losses to unwary creditors viadefaults and early calls. Between 1875 and 1896, according to Milton Friedman, pricesfell in the United States by 1.7% a year, and in Britain by 0.8% a year [18].
The third was between 1930-1933 when the rateof deflation was approximately 10 percent; part of the United States' slide into the Great Depression, where banks failed and unemployment peaked at25%.
The deflation of the Great Depression, as in1836, did not begin because of any sudden rise or surplus in output. It occurredbecause there was an enormous contraction of credit (money), bankruptcies creatingan environment where cash was in frantic demand, and the Federal Reserve did notadequately accommodate that demand, so banks toppled one-by-one. From the standpointof the Fisher equation, there was a concomitant drop both in money supply and thevelocity of money which was so profound that price deflation took hold despite theincreases in money supply spurred by the Federal Reserve.
Throughout the history of the United States, inflation has approached zero and dipped below for short periods of time (negativeinflation is deflation). This was quite common in the 19th century and in the 20thcentury before World War II.
Some economists believe the United States may be currently experiencing deflation as part of the financial crisis of 2007-2010;compare the theory of debt-deflation. Year-on-year, consumer prices dropped forsix months in a row to end-August 2009, largely due to a steep decline in energyprices.
Consumer prices dropped 1 percent in October,2008. This was the largest one-month fall in prices in the US since at least 1947. That record was again broken in November, 2008 with a 1.7% decline.In response, the Federal Reserve decided to continue cutting interest rates, downto a near-zero range as of December 16, 2008 [18]. In late 2008 and early 2009,some economists feared the US could enter a deflationary spiral. Economist NourielRoubini predicted that the United States would enter a deflationary recession, andcoined the term „stag-deflation“ to describe it [19]. It is the oppositeof stagflation, which was the main fear during the spring and summer of 2008. The United States then began experiencing measurable deflation, steadily decreasingfrom the first measured deflation of — 0.38% in March, to July's deflation rateof — 2.10%. On the wage front, in October 2009 the state of Colorado announced thatits state minimum wage, which is indexed to inflation, is set to be cut, which wouldbe the first time a state has cut its minimum wage since 1938 [19].
6. Conclusion
Whereas policy makers today speak of the needto avoid deflation their assessment is colored by the experience of the bad deflationof the 1930s, and its spread internationally, and the ongoing deflation in Japan.Hence, not only do policy makers worry about deflation proper they also worry aboutits spread on a global scale.
If ideology can blind policymakers to introducingnecessary reforms then the second lesson from history is that, once entrenched,expectations of deflation may be difficult to reverse. The occasional fall in aggregateprices is unlikely to significantly affect longer-term expectations of inflation.This is especially true if the monetary authority is independent from politicalcontrol, and if the central bank is required to meet some kind of inflation objective.Indeed, many analysts have repeatedly suggested the need to introduce an inflationtarget for Japan. While the Japanese have responded by stating that inflation targetingalone is incapable of helping the economy escape from deflation, the Bank of Japan'sstubborn refusal to adopt such a monetary policy strategy signals an unwillingnessto commit to a different monetary policy strategy. Hence, expectations are evenmore unlikely to be influenced by other policies ostensibly meant to reverse thecourse of Japanese prices. The Federal Reserve, of course, does not have a formalinflation target but has repeatedly stated that its policies are meant to controlinflation within a 0-3% band. Whether formal versus informal inflation targets representsubstantially different monetary policy strategies continues to be debated, thoughthe growing popularity of this type of monetary policy strategy suggests that itgreatly assists in anchoring expectations of inflation.
7. References
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12. Krugman, Paul. „Its Back: Japan's Slump and the Return of the Liquidity Trap.“ Brookings Papers on Economic Activity2 (1998): 137-205.
13. Meltzer, Allan H. A History of the Federal Reserve. Chicago: Chicago University Press, 2003.
14. Milton Friedman, Anna Jacobson Schwartz. A monetaryhistory of the United States, 1867-1960. Princeton University Press book, 1971.860p.books.google.ru/books? id=Q7J_EUM3RfoC&printsec=frontcover&dq=related:ISBN0521837995&lr=#v=onepage&q&f=false
15. Siklos, Pierre. „Deflation“. EH.Net Encyclopedia,edited by Robert Whaples. May 11, 2004. URL eh.net/encyclopedia/article/siklos.deflation
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17. Robert Samuelson. „The specter of deflation“.November 11, 2008, articles.ocregister.com/2008-11-11/opinion/24737155_1_deflation-consumer-prices-mild-inflation
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19. Randall E. Parker. Reflections on the Great Depression.Edward Elgar Publishing, 2002.230p.
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