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In the News

Balancing out Good and Bad Deflation

Penny Brooks

19th February 2015

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Mark Carney says that a period of low inflation – even deflation – propelled by falling oil prices would be "unambiguously good" for the economy. How do we reconcile this with the textbook position that the economy needs a little bit of inflation, and that deflation is to be avoided? He has also said there were no signs yet of "bad" deflation – what is the difference between 'good' and 'bad' deflation? Can we assess whether it is true to say that deflation is always bad for the economy?

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Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor

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