Quarterly Journal of Austrian Economics

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Deflation and Economic Growth

The Quarterly Journal of Austrian Economics

Tags Booms and BustsBusiness Cycles

10/09/2006Greg Kaza

Volume 9, No. 2 (Summer 2006)


Joseph T. Salerno (2003) argues economic growth has occurred in periods of deflation. The Austrian School’s broad understanding of deflation is underscored by the four definitions offered by Salerno (growth deflation, cash-building deflation, bank credit deflation, and confiscatory deflation). Keynesians, by contrast, define the phenomenon more narrowly, equating it with a negative Consumer Price Index (CPI) and economic contraction. The purpose of this note is to argue that economic expansions have occurred in periods of negative CPI, and to challenge Keynesians to improve upon their narrow definition of deflation.


Greg Kaza

Greg Kaza is executive director of the Arkansas Policy Foundation.

Cite This Article

Kaza, Greg. "Deflation and Economic Growth." The Quarterly Journal of Austrian Economics 9, No. 2 (Summer 2006): 95–97.