TY  - JOUR
AU  - Bordo,Michael D.
AU  - Filardo,Andrew
TI  - Deflation and Monetary Policy in a Historical Perspective: Remembering the Past or Being Condemned to Repeat It?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10833
PY  - 2004
Y2  - October 2004
UR  - http://www.nber.org/papers/w10833
L1  - http://www.nber.org/papers/w10833.pdf
N1  - Author contact info:
Michael D. Bordo
Department of Economics
Rutgers University
New Jersey Hall
75 Hamilton Street
New Brunswick, NJ 08901
Tel: 732/822-7152
Fax: 732/932-7416
E-Mail: bordo@econ.rutgers.edu

Andrew Filardo
Monetary Policy and Exchange Rate Department
Bank for International Settlements
CH-4002 Basel
Switzerland
Tel: 41-61-280-9250
E-Mail: andrew.filardo@bis.org
AB  - What does the historical record tell us about how to conduct monetary policy in a deflationary environment? We present a broad cross-country historical study of deflation over the past two centuries in order to shed light on current policy challenges. We first review the theoretical literature on deflation. We then characterize deflation by distinguishing among the "good, the bad and the ugly" ones - considering both empirical determinants and historical narratives of each type. Emphasis is put on the linkages between the current inflation environment and that of the gold standard period. Particular attention is also put on what the historical record reveals about policies to escape undesirable deflation. In this regard we develop a policy typology based on the relative merits of interest rate and monetary instruments in combating different types of inflation/deflation behavior.
ER  -