Staff Report 331

Deflation and Depression: Is There an Empirical Link?

Patrick J. Kehoe | Stanford University, University College London, Federal Reserve Bank of Minneapolis
Andrew Atkeson | Federal Reserve Bank of Minneapolis Consultant and UCLA

Published January 1, 2004

Are deflation and depression empirically linked? No, concludes a broad historical study of inflation and real output growth rates. Deflation and depression do seem to have been linked during the 1930s. But in the rest of the data for 17 countries and more than 100 years, there is virtually no evidence of such a link.

Published In: American Economic Review (Vol. 94, No. 2, May 2004, pp. 99-103)

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