[메모] deflation

자료 1: Deflation, Productivity Shocks and Gold: Evidence from the 1880-1914 period (Michael Bordo,  his recent paper list )

(... ...) We distinguish between good and bad deflations. In the former case falling prices are driven by aggregate supply shocks (likely reflecting productivity advances), which outweigh negative demand shocks such as stagnant gold production and the widespread

adoption of the gold standard. In the latter case, negative aggregate demand shocks outpace any expansion in aggregate supply. For example, negative money shocks that are non neutral over a significant period would generate a “bad” deflation. This was the experience in the Great Depression (1929-1933), and the recession of 1920-21.1 There is

also a third possibility—the Classical case where deflation – for example, caused by

negative money shocks—is neutral, when monetary neutrality holds. 

1. Many people take issue with the term “good” deflation on the view that any departures from price stability are problematic. An alternative set of terms that we could use are “benign” versus “malignant” deflation or “the good, the bad and the ugly” as used by Borio and Filardo (2003). These terms connote: productivity driven deflation as used by us; low deflation and stagnation as has been the case in Japan; and the interwar experience.

자료 2: Deflation in a historical perspective (Michael Bordo/Andrew Filardo, BIS, direct PDF link, )

(... ...) Our survey of history suggests that deflations of the past fall into three broad categories: “the good, the bad and the ugly”. To understand the differences, we first use historical narratives to identify and illustrate each of these three types of deflation. We then provide a more formal statistical evaluation of the costs of deflation by focusing on the determinants of different types of deflationary episodes. Armed with these results, we turn to lessons to be learned about the efficacy of monetary policy in dealing with inflation/deflation, and offer a holistic approach to frame the challenges facing policy makers. In this regard, several different zones of price level movements, ranging from high inflation to deep deflation, highlight the differential role of monetary policy in each. From this perspective, the contemporary policy tradeoffs of dealing with deflation are, arguably, put in a clearer light. In particular, the historical record suggests that all deflations are not alike and therefore may require different approaches.

Our historical approach leads us to conclude that most central banks today put too little emphasis on the role of monetary aggregates in assessing the broad policy tradeoffs presented by deflation. History shows that the usefulness of monetary aggregate targeting (versus interest rate targeting) depends nonlinearly on the inflation/deflation zone the economy is in. For high inflation and deep deflation, monetary targeting appears to be a relatively effective guide for policy. When inflation is low, the usefulness of the monetary aggregates may be exceeded by short-term interest rates, especially if velocity is sufficiently unpredictable. In the broader context of monetary frameworks, however, our analysis sheds light on the importance of mixed monetary policy strategies. History suggests that a monetary framework that combines the best features of monetary aggregate and interest rate targeting, not unlike the current approach of the European Central Bank, is more likely to be a robust approach to the varied inflation/deflation challenges, as have been experienced in the past.