The Research Of Deflation

From the 1990's, especially from the Asian Financial Crisis in 1997, many countries in the world have been afflicted by deflation that is stil 1 spreading. Many economists regard it as an obstacle of the global economic development. In China, deflation appeared at the late part of 1997 and lasted until the end of 2002. The spreading of it won as much attention as it did in the Great Depression of 1929-1933. As to its origin, its features, the coping methods and the effects of them, theorists' opinions vary. This paper composed of seven chapters is a systematic research on these problems.The first chapter is an introduction. It includes the background of this research, the literature review, the significance of the research and its limitations.The second chapter gives a theoretical definition and evaluation of deflation. It also makes a summary of the global background of deflation and an analysis of the reasons and the harm it bears.The third chapter reviews the deflation histories in the developed countries of the world and summarizes the various opinions on the reasons for them. Besides, it analyzes the typical deflation in America, Japan, Germany, France, England and Singapore.The fourth chapter introduces various theories on deflation and the causes of them. It emphasized Fisher's theoryof debt-deflation and Krugman's model of self-strenth deflation and also summarizes other theoretical analyses from the aspects of currency finance and non-currency finance. Besides, it analyzes the international spreading process of deflation.The fifth chapter discusses the economic influence of deflation. Deflation Will lead to the redistribution of wealth, which is disadvantageous to the production activities and it is likely to result in economic depression, deterioration of the working environment, and the increase of laid-off rate. It has different effects on various production structures, which in turn affects the adjustment of them. By changing the asset value, it produces indirect effect on the investment in the aspects of investing tendency and the formation of capital. In addition, it directly affects consumption because of the vicious cycle of lowering price 梔elaying consumption條owering price.The sixth chapter centers on the efficiency of policies dealing withdeflation. The financial policy is more effective than the expanding currency policy. So long as the supply is rising, the expanding financial policy will lead to the rising of prices that turns out to be effective in coping with deflation. The chapter also includes the discussion on the efficiency of redistribution policy and foreign trading policy on dealing with deflation. The seventh chapter discusses the efficiency of Chinese policy dealing with deflation. The cause of Chinese deflation is included in the chapter. The expanding currency policy didn't achieve what was expected as its effect was limited by deflation. On the contrary, expanding financial policy achieved some as it stimulated consumption and promoted the improving of the economic structure, for example, from 2003, deflation in China was mitigated. However, in the aspect of civil investment, it has not achieved much. The chapter also discusses other policies such as economic structure adjustment policy, revenue policy and consumption policy.