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Is Deflation Costly After All? The Perils of Erroneous Historical Classifications
Résumé I estimate average economic activity during periods of inflation and deflation while accounting for measurement errors in 19th century prices. These measurement errors lead to underestimation (overestimation) of economic activity during periods of inflation (deflation). By exploiting multiple deflation indicators, it is possible to recover the true relationship; the shortfall of U.S. industrial production growth during periods of deflation ranges from ‐4.5 pp to ‐7.6 pp, instead of ‐2 pp. I also find a negative relationship between deflation and real activity in the U.K. I then examine the cross‐country variation in the estimates for eleven countries. The patterns are consistent with stronger biases for countries with more serious measurement errors in prices.
   
Mots-clés Deflation, real activity, 19th century, measurement errors, bounds, GMM
   
Citation Kaufmann, D. (2020). Is Deflation Costly After All? The Perils of Erroneous Historical Classifications. Journal of Applied Econometrics, 0(0), 1-1.
   
Type Article de périodique (Anglais)
Date de publication 14-4-2020
Nom du périodique Journal of Applied Econometrics
Volume 0
Numéro 0
Pages 1-1
URL https://doi.org/10.1002/jae.2762