Deflation
in sentence
696 examples of Deflation in a sentence
The ECB's choice, strangely, focuses more on its own anti-inflation posture than
deflation.
For more than two decades – a period characterized by chronic recession and
deflation
– Japan has retained its position as the world’s richest country in terms of net wealth abroad.
Today, there is little short-run inflation risk in the advanced economies; core inflation will decline, both in the euro zone and in America, and Japan’s problem will be
deflation.
The stock market collapsed, moderate inflation turned into mild deflation, many bank loans became uncollectible and economic growth evaporated.
It pursued growth-boosting investment in infrastructure and real-estate development to eliminate deflation, while maintaining artificially low interest rates to contain the rise of public debt.
The share of countries recording outright
deflation
in consumer prices (the green line) is higher in 2015 than that of countries experiencing double-digit inflation (7% of the total).
Indeed, the risk for the world economy is actually tilted toward
deflation
for the 23 advanced economies in the sample, even eight years after the onset of the global financial crisis.
Early in that terrible decade,
deflation
became a reality for nearly all countries and for all of the advanced economies.
In the last two years, at least six of the advanced economies – and as many as eight – have been coping with
deflation.
Especially instructive is the 2.2% price decline in Greece for the 12 months ending in July – the most severe example of ongoing
deflation
in the advanced countries and counterproductive to an orderly solution to the country’s problems.
When some countries want to run smaller deficits without a corresponding desire by others to reduce surpluses, the result is the exportation of unemployment and a bias toward
deflation
(as is the case now).
Absent this helping hand from the exchange rate, all southern European rebalancing will need to take place internally through domestic deflation, which in turn risks jeopardizing their return to public-debt sustainability.
The last option –
deflation
of wages and prices – to reduce costs, achieve a real depreciation, and restore competitiveness is associated with ever-deepening recession.
Indeed, although structural adjustment continues in China, the economy is facing an increasingly serious contraction in demand and continued
deflation.
Given this, China’s current
deflation
should motivate its policymakers to pursue monetary easing, reducing real interest rates to a much lower level, even zero.
As we describe in our new book, A Crisis of Beliefs: Investor Psychology and Financial Fragility, the fundamental cause of the crisis was the
deflation
of the housing bubble, starting in early 2007.
The
deflation
of the housing bubble implied massive losses for banks.
Depreciation inside the eurozone in the form of deflation, on the other hand, would drive large parts of the real economy into excessive debt, because only the value of assets, not that of bank debts, would decline.
“[I]nflation is unjust and
deflation
is inexpedient," he wrote.
“Of the two perhaps
deflation
is…the worse; because it is worse…to provoke unemployment than to disappoint the rentier.
Because many contracts are “sticky" (that is, not easily revised) in monetary terms, inflation and
deflation
would both inflict damage on the economy.
They distinguish between “benign disinflation" and “bad deflation."
By contrast, “bad
deflation"
means an increase in the real burden of debt.
Thus, price
deflation
means debt inflation; and a higher debt burden means lower spending.
Given the huge levels of outstanding private and public debt, bad deflation, as Bootle writes, “is a nightmare almost beyond imagining."
But how can we stop benign disinflation from turning into bad
deflation?
Avoiding
deflation
– and thus sustaining economic recovery – would seem to depend on one of two scenarios: either a rapid reversal in the fall of energy prices, or a deliberate policy to raise output and employment by means of public investment (which, as a byproduct, would bring about a rise in prices).
Indeed, the economists Ronald McKinnon and Kenichi Ohno have singled out US pressure for yen appreciation as a key source of the Japanese economy’s long-term
deflation
and stagnation – the so-called “lost decade” of economic malaise that is now well into its second.
Indeed, throughout the 1990s, despite rising output,
deflation
occurred, which means that India's potential output is expanding.
While reducing this gap to 3% of GDP has led to higher prices, this is exactly what Japan needs after years of persistent
deflation.
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