The postbellum deflation and its lessons for today

A number of recent studies examining historical experiences with deflation have called into question the widely-held view that maintains deflation is economically harmful. These studies contend that a broad, historical perspective reveals a more nuanced view of deflation, one that requires taking seriously both malign and benign deflation. This paper builds on these findings by taking an in-depth look at the U.S. experience with deflation during the postbellum period and considers whether it supports the claim that deflation can be benign. This paper also considers the lessons of this deflation experience for monetary policy today.