THE IMPACT OF DEFLATION ON FISCAL AGGREGATES

Adina Violeta TRANDAFIR, Octav NEGURIȚĂ, Octav NEGURIȚĂ, Claudia GUNI, Claudia GUNI

Abstract


This article addresses the phenomenon of deflation from a historical perspective, a phenomenon rarely encountered in our day. Deflation is generally defined as the fall in the aggregate level of the consumer price index, respectively, the reverse inflationary phenomenon. The article also presents, in addition to experiences in different countries in times when deflation has been more pronounced and longer, and the effects it may have on public finance aggregates. The paper analyses the literature of all time that deals with the subject, as well as a presentation of the empirical data recorded, and an econometric analysis wishing to highlight the impact that the aggregate index of prices may have on public debt, using data recorded in Romania during 2000-2017.

Keywords


deflation, consumer price index, fiscal aggregates

Full Text:

PDF

References


Aguiar, M., Amador, M. (2016). “Fiscal Policy in Debt Constrained Economies.” Journal of Economic Theory, 161, pp. 37–75.

Ahearne, A., Gagnon, J., Haltimaier, J., Kamin, S. et al. (2002). “Preventing Deflation: Lessons from Japan’s Experience in the 1990s.” Federal Reserve Board International Finance Discussion Papers, no 729, June.

Akitoby, B., Komatsuzaki, T., & Binder, A. (2014). “Inflation and Public Debt Reversals in the G7 Countries.” IMF Working Paper No. 14/96, available at: https://www.imf.org/external/pubs /ft/wp /2014/wp1496.pdf, accessed March, 6th.

Arellano, C., Bai, Y. (2017). “Fiscal austerity during debt crises.” Economic Theory, 64(4), pp. 657–673.

Bayoumi, Tamim, & Collyns, Charles. Post-buble Blues: How Japan Responded to Asset Price Collapse, IMF: Washington, DC, 1999.

Bernanke, Ben (1995). “The Macroeconomics of the Great Depression: A Comparative Approach.” Journal of Money, Credit, and Banking (February), pp. 1–28.

Bordo, M., & Eichengreen, B. (2002). “Crises Now and Then: What Lessons from the Last Era of Financial Globalisation?” NBER Working Paper, no 8716, January.

Bordo, M., & Jeanne, O. (2002). “Boom-busts in Asset Prices, Economic Instability, and Monetary Policy.” NBER Working Paper, no 8966, June.

Bordo, Michael D., & Redish, Angela (2003). “Is Deflation Depressing? Evidence from the Classical Gold Standard.” NBER Working Paper 9520.

Bordo, Michael, Erceg, Christopher, & Evans, Charles (2000). “Money, Sticky Wages, and the Great Depression.” American Economic Review, Vol. 90, No. 5, pp. 1447–1463.

Borio, C., & Lowe, P. (2002). “Asset Prices, Financial and Monetary Stability: Exploring the Nexus, Paper Presented at the BIS Conference on ‘Changes in Risk Through Time: Measurement and Policy Options’”, BIS Working Papers, no 114, Basel, July.

Dupor, B., Guerrero, R. (2017). “Local and aggregate fiscal policy multipliers.” Journal of Monetary Economics, 92, pp. 16–30.

Eichengreen, Barry. Golden Fetters: The Gold Standard and the Great Depression, Oxford University Press, 1995, pp. 119–139.

Farhi, E., Werning, I. (2017). “Fiscal unions.” American Economic Review, 107(12), pp. 3788–3834.

Fisher, Irving (1933), “Debt Deflation Theory of Great Depressions.” Econometrica, Vol. 1, pp. 377–57.

FMI (2003). “Deflation: Determinants, Risks, and Policy Options — Findings of an Interdepartmental Task Force”, available at http://www.imf.org/external/pubs/ft/def/ 2003/eng/043003.htm, accessed March, 10th.

Frieden, Jeffrey. “The Dynamics of International Monetary Systems: International and Domestic Factors in the Rise, Reign, and Demise of the Classical Gold Standard.” In Jack Snyder & Robert Jervis (eds.), Coping with Complexity in the International System, Boulder: Westview Press, 1993.

Fuhrer, J., & Tootell, G. (2003). “Issues in Economics: What Is the Cost of Deflation?” Regional Review, Q3, pp. 2–5.

Greer, R. A., Denison, D. V. (2016). “Determinants of Debt Concentration at the State Level.” Public Budgeting and Finance, 36(4), pp. 111–130.

Guimaraes, B., Machado, C., Ribeiro, M. (2016). “A Model of the Confidence Channel of Fiscal Policy.” Journal of Money, Credit and Banking, 48(7), pp. 1363–1395.

Hsing, Y. (2017). Is Real Depreciation or More Government Deficit Expansionary? The Case of Slovenia.” South East European Journal of Economics and Business, 12(1), pp. 50–56.

Huang, K. X. D., Meng, Q., Xue, J. (2017). “Balanced-Budget Income Taxes and Aggregate Stability in a Small Open Economy.” Journal of International Economics, 105, pp. 90–101.

Koo, R. Balance sheet recession: Japan’s struggle with uncharted economics and its global implications, John Wiley and Sons, 2003.

Lindert, P., & Williamson, J. G. (1985). “Growth, Equality and History.” Explorations in Economic History, Vol. 22, No. 4 (October), pp. 341–377.

Nicolas End et al. (2015). “Deflation and Public Finances: Evidence from the Historical Records.” IMF Working Paper WP/15/176, available at: https://www.imf.org/external/ pubs/ft/wp/201 5/wp15176.pdf, accessed March, 12th.

Ohanian, L. E. (2017). “The Great Recession in the Shadow of the Great Depression. A Review Essay on Hall of Mirrors: The Great Depression, the Great Recession, and the Uses and Misuses of History,” by Barry Eichengreen, Journal of Economic Literature, 55(4), pp. 1583–1601.

Okina, K., & Shiratsuka, S. (2003). “Japan’s Experience with Asset Price Bubbles: Is It a Case for Inflation Targeting?” In W. Hunter, G. Kaufman, & M, Pomerleano (eds), Asset Price Bubbles: The Implications for Monetary, Regulatory, and International Policies, MIT press, January, chapter 7, pp 81– 99.

Sauvy, A. Histoire économique de la France entre les deux guerres, Paris: Fayard, 1965.

Stern, G. (2003). “Should We Accept the Conventional Wisdom about Deflation?” Federal Reserve Bank of Minneapolis, The Region (September).

www.insse.ro




DOI: https://doi.org/10.26458/1836

Copyright (c) 2018 Adina Violeta TRANDAFIR

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.


As to respect GDPR, this site do not allow free registation. Please contact us at: ashues@spiruharet.ro

GDPR Policy:

Please read the statement below:
Processing of personal data and free movement of these data

Registering with this site the author agree with the collection, processing and use of his personal data, exclusively within the ASHUES journal.


 

AWARDS 

WILL BE CONFERRED AT THE END OF THE YEAR

To crown and encourage research efforts of the authors, at the end of a year of publishing our journal board will award online the best papers by distinctions:

1. Best Original Paper Award -  for the paper that has brought something completely new in the reader's attention (a new concept, a new trend, a new proposal in research, etc.)

2. Excellence Award - for the most cited paper and visualized in the online environment during the year

3. First, Second and Third Award- for the best documented and substantiated papers during the year

4. Special Award - to award PhD students and postdocs for the most well documented and substantiated paper


Administred:Rocsana B. Manea Tonis

http://icourses.wix.com/itmk