As a population ages, impact of deflation worsens – BoJ study
Research says falling prices inflict greatest harm on young people
When a population ages, this can magnify the negative impact of deflation on the economy, a Bank of Japan (BoJ) discussion paper concludes.
In the paper, published on November 20, BoJ senior economist Takemasa Oda draws on data from Japan’s “lost decades”. He uses a model to quantitatively evaluate the long-run effects of deflation on aggregate output in the country between 1980 and 2021, when Japan experienced low and sometimes negative inflation.
The general equilibrium monetary model that Oda
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