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http://web.mit.edu/krugman/www/deflator.html
Just to make it clear. The paper is about disinflation, it's just that people like me and Krugman (unlike Fred) are mistaken and call it deflation...
(By the way, I believe his call for deflation is a little but too late, coming just when things are about to turn .. but that is another story...)
CAN DEFLATION BE PREVENTED? This week's cover story in The Economist makes it more or less official. Deflation, not inflation, is now the greatest concern for the world economy. Over the past year, producer prices have fallen throughout the advanced world; consumer prices have been falling for the last 6 months in France and Germany; in Japan wages have actually fallen 4 percent over the past year. Until the recent crisis prices were falling in Brazil; they continue to fall in China and Hong Kong; they will probably soon be falling in a number of other developing countries.
So far, none of these price declines looks anything like the massive deflation that accompanied the Great Depression. But the appearance of deflation as a widespread problem is disturbing, not only because of its immediate economic implications, but because until recently most economists - myself included - regarded sustained deflation as a fundamentally implausible prospect, something that should not be a concern.
The point is that deflation should - or so we ....
So far, none of these price declines looks anything like the massive deflation that accompanied the Great Depression. But the appearance of deflation as a widespread problem is disturbing, not only because of its immediate economic implications, but because until recently most economists - myself included - regarded sustained deflation as a fundamentally implausible prospect, something that should not be a concern.
The point is that deflation should - or so we ....
(By the way, I believe his call for deflation is a little but too late, coming just when things are about to turn .. but that is another story...)
(oops , maybe I shouldn't have said that )
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