The spectre of deflation: a review of empirical evidence

What explains the widespread fear of deflation? This article reviews the history of thought, economic history, and empirical evidence on deflation, with a view to answering this question. It also outlines informally the main effects of deflation in applied monetary models. The main finding is that - for both historical and contemporary deflations - there are many open, empirical questions that could be answered using the tools economists use to study inflation and monetary policy more generally.