Five Common Errors about Deflation
DOI:
https://doi.org/10.52195/pm.v3i1.347Abstract
Deflation is generally considered as an evil that must be prevented. Economists as well are focusing on the question of deflation prevention. This paper examines the reasons for why deflation is considered as bad and refutes in this context five common errors concerning deflation: That deflation leads to an unfair redistribution, that deflation induces an decrease in production, that deflation induced price instability leads to chaos, that it is the cause of mass unemployment and can put the economy in a disastrous liquidity trap. It is concluded that the standard analysis of deflation must be revised.
Key words: deflation.
Clasificación JEL: E31
Resumen: Comúnmente se considera la deflación como algo malo que hay que evitar. También los economistas se esfuerzan en estudiar cómo se puede prevenir la deflación. Este artículo analiza las razones por las cuales se considera la deflación como algo malo y refuta en este contexto cinco errores muy difundidos sobre la deflación: que la deflación causa una redistribución arbitraria, que la deflación lleva a una reducción de la producción, que una inestabilidad de precios causada por la deflación produce caos, que es la causa de paro masivo y que puede poner a la economía en una trampa de liquidez desastrosa. Se concluye que, ante estos errores, hay que revisar el análisis estándar de la deflación.
Palabras clave: deflación.
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