Economics of Deflation

Edited by Pierre L. Siklos, Professor Emeritus, Department of Economics, Lazaridis School of Business and Economics, Wilfrid Laurier University and Balsillie School of International Affairs, Canada

'Deflation may be one of the most daunting policy challenges facing policymakers today. What makes deflation particularly challenging is its multifaceted nature and its newness for the current generation of economists and policymakers. With his extensive knowledge of history and the current debate, Pierre Siklos brings together an essential collection of readings that surveys the key aspects of deflation - from the microeconomic costs to the implications for monetary policy. This volume offers a concise, yet rich, overview of the economics of deflation and will be an indispensable reference for policy makers, their staffs, economists and all those grappling with the complexities of the phenomena called deflation.'

• Contents:Volume IAcknowledgementsIntroduction Pierre L. SiklosPART IMONETARY REGIMES AND DEFLATION 1. Milton Friedman (1969), ‘The Optimum Quantity of Money’2. R.G. Hawtrey (1919), ‘The Gold Standard’3. Lauchlin Currie (1933), ‘Treatment of Credit in Contemporary Monetary Theory’4. L.J. Hume (1963), ‘The Gold Standard and Deflation: Issues and Attitudes in the Nineteen-Twenties’5. Robert B. Barsky and J. Bradford De Long (1991), ‘Forecasting Pre-World War I Inflation: The Fisher Effect and the Gold Standard’6. J. Bradford DeLong (2000), ‘America’s Historical Experience with Low Inflation’7. David Reifschneider and John C. Williams (2000), ‘Three Lessons for Monetary Policy in a Low-Inflation Era’PART IIDEBT DEFLATION: CAUSES AND CONSEQUENCES 8. Irving Fisher (1933), ‘The Debt-Deflation Theory of Great Depressions’9. Ben S. Bernanke (1983), ‘Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression’10. Mervyn King (1994), ‘Debt Deflation: Theory and Evidence’11. Charles W. Calomiris (1993), ‘Financial Factors in the Great Depression’12. Robert W. Dimand (2003), ‘Irving Fisher on the International Transmission of Booms and Depressions through Monetary Standards’PART IIIMONETARY POLICY UNDER DEFLATION 13. F.W. Pethick Lawrence (1918), ‘Deflation and Prices after the War’14. Lars Jonung (1979), ‘Knut Wicksell’s Norm of Price Stabilization and Swedish Monetary Policy in the 1930s’15. Gustav Cassel (1928), ‘The Rate of Interest, the Bank Rate, and the Stabilization of Prices’16. F.A. Hayek (1984), ‘The Monetary Policy of the United States After the Recovery from the 1920 Crisis’17. Bruce D. Smith (1985), ‘American Colonial Monetary Regimes: The Failure of the Quantity Theory and Some Evidence in Favour of an Alternate View’18. Scott Sumner (1993), ‘Colonial Currency and the Quantity Theory of Money: A Critique of Smith’s Interpretation’19. Milton Friedman (1992), ‘Franklin D. Roosevelt, Silver, and China’20. Marvin Goodfriend (2000), ‘Overcoming the Zero Bound on Interest Rate Policy’21. Charles W. Calomiris and R. Glenn Hubbard (1989), ‘Price Flexibility, Credit Availability, and Economic Fluctuations: Evidence from the United States, 1894–1909’PART IVTHE LIQUIDITY TRAP AND THE ZERO LOWER BOUND 22. Don Patinkin (1974), ‘The Role of the ‘Liquidity Trap’ in Keynesian Economics’23. Karl Brunner and Allan H. Meltzer (1968), ‘Liquidity Traps for Money, Bank Credit, and Interest Rates’24. Jean-Michel Grandmont and Guy Laroque (1976), ‘The Liquidity Trap’25. Paul R. Krugman (1998), ‘Its Baaack: Japan’s Slump and the Return of the Liquidity Trap’Name IndexVolume IIAcknowledgementsAn introduction by the editor to both volumes appears in Volume IPART IWAGE RIGIDITY AND DEFLATION 1. Robert E. Hall (1980), ‘Employment Fluctuations and Wage Rigidity’2. A.C. Pigou (1923), ‘Prices and Wages From 1896–1914’3. Barry Eichengreen and Jeffrey Sachs (1985), ‘Exchange Rates and Economic Recovery in the 1930s’4. Ben S. Bernanke and Kevin Carey (1996), ‘Nominal Wage Stickiness and Aggregate Supply in the Great Depression’5. Anthony Patrick O’Brien (1989), ‘A Behavioral Explanation for Nominal Wage Rigidity During the Great Depression’6. Christopher Hanes (1993), ‘The Development of Nominal Wage Rigidity in the Late 19th Century’7. Michael D. Bordo, Christopher J. Erceg and Charles L. Evans (2000), ‘Money, Sticky Wages, and the Great Depression’PART IISELECTED HISTORICAL STUDIES OF DEFLATIONARY EPISODES 8. Ben Bernanke and Harold James (1991), ‘The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison’9. Lauchlin Currie (1934), ‘The Failure of Monetary Policy to Prevent the Depression of 1929–32’10. Peter Temin and Barrie A. Wigmore (1990), ‘The End of One Big Deflation’11. Riccardo Faini and Gianni Toniolo (1992), ‘Reconsidering Japanese Deflation during the 1920s’12. Albert O. Hirschman (1948), ‘Inflation and Deflation in Italy’13. Stephen G. Cecchetti (1992), ‘Prices during the Great Depression: Was the Deflation of 1930–1932 Really Unanticipated?’14. James D. Hamilton (1992), ‘Was the Deflation During the Great Depression Anticipated? Evidence from the Commodities Futures Market’PART IIIA MODERN EPISODE OF ONGOING DEFLATION: JAPAN 15. Kenneth N. Kuttner and Adam S. Posen (2001), ‘The Great Recession: Lessons for Macroeconomic Policy from Japan’16. Robert L. Hetzel (2003), ‘Japanese Monetary Policy and Deflation’17. Thomas F. Cargill (2001), ‘Monetary Policy, Deflation, and Economic History: Lessons for the Bank of Japan’PART IVPOLICIES TO END DEFLATION 18.T. E. Gregory (1925), ‘What Can Central Banks Really Do?’19.John R. Commons (1925), ‘The Stabilization of Prices and Business’20. O.M.W. Sprague (1929), ‘Price Stabilization’21. John B. Taylor (2001), ‘Low Inflation, Deflation, and Policies for Future Price Stability’22. Thomas M. Humphrey (2001), ‘Monetary Policy Frameworks and Indicators for the Federal Reserve in the 1920s’23. Christina D. Romer (1992), ‘What Ended the Great Depression?’Name Index