Moderate deflation is good for the economy
For more than 10 years, the rate of price increases in Japan has been very slow. At times the country has even experienced deflation, especially in recent years. Since real gross domestic product growth has also been weak, numerous observers, including many US officials, have tied Japan's stagnation to its deflation and have chided Japan's leaders for not being more aggressive in ending deflation. But Japan's deflation has been a bright spot. It was intentionally brought about for sound reasons and has not been an obstacle to faster growth. It is vital that policymakers understand Japan's deflation, especially given recent concern that the US may also soon face deflation. Japanese inflation rose from 0.1 per cent in 1987 to about 3.2 per cent in 1991. By 1989 policymakers had become concerned and tightened monetary policy. As a result, inflation fell slowly, reaching zero in 1995. Over this period, Bank of Japan officials consistently argued that their goal was to reduce the pace of service price increases to zero, which would require a fall in the prices of goods and assets. Overall, this was a prescription for deflation. Japan's policy followed Milton Friedman's analysis, set out in his 1969 work Optimum Quantity of Money and Other Essays. He showed that optimal policy would stabilise wages and service prices, allowing the overall prices of goods and services to fall at a rate equal to the real rate of interest. Even so, some US analysts have argued that Japan's decade of slow growth was a result of these deflationary policies. But Japan did not achieve sustained deflation until 1998. The fact that Japan's real gross domestic product has risen at an average rate of only 1.1 per cent since 1991, interspersed with recessions, was not due to deflation. While inflation slowed from 0.9 per cent in 1991-98 to minus 0.7 per cent in 1998-2002, real GDP growth slowed little, declining from 1.2 to 0.9 per cent. The problem of weak output growth in Japan is structural. The Organisation for Economic Co-operation and Development data show that if Japan had achieved its potential output in 2002, real GDP would have been only about 2.9 per cent higher than it was; output growth would have averaged 1.3 per cent a year since 1991 instead of the actual 1.1 per cent rate. Even without cyclical weakness, Japan's growth would have been extremely slow. While explosive monetary growth has boosted output growth recently, it is also bringing deflation to an end. Deflation has slowed from 1 per cent at the end of 2001 to 0.5 per cent at the end of 2002 and was only 0.2 per cent in the year ending in July. Unfortunately, the current cyclical improvement in output will not reverse long-term stagnation. The OECD estimates that potential output growth will continue to decline. Another misconception about deflation is that it has damaged the financial sector. Some analysts have argued that deflation was the cause of the deterioration in banks' balance sheets. To the extent that they are correct, it is because regulators were negligent in not closing failed institutions in a timely fashion. Well capitalised financial institutions are net creditors. Unforeseen deflation, the kind that redistributes income and wealth, benefits net creditors in the same way that unforeseen inflation benefits debtors at the expense of creditors. If the pace of price change did damage banks, it is likely that it did so in a scenario reminiscent of the US savings and loan crisis. First, unforeseen inflation would have wiped out some banks' capital; then an unforeseen slowing in inflation would have further hurt those with negative net worth - in effect, net debtors. The latter force might also further decrease the net worth of institutions that had already been put under water by defaults arising from an underperforming economy. Deflation per se benefits financial businesses. It redistributes income to net creditors when it is unforeseen; and it boosts bank deposits relative to income and other assets because positive real returns accrue to depositors from holding money whose purchasing power increases. Any adverse cyclical developments that arise from an unforeseen slowing in inflation could increase the number of defaults on loans and damage banks' capital. But the deflation itself will work to offset those costs, as long as banks remain capitalised and net creditors. US policymakers suggest that deflation would be costly and that extraordinary efforts must be made to avoid it. This conclusion is not supported by Japan's policy experience or by monetary theory. Moderate deflation is good for the economy - and especially for financial institutions. Even inflation- targeting policymakers should broaden their notion of price stability to encompass that derived by Friedman and implemented by the BoJ.
The writer teaches economics at DePaul University, Chicago, and is a former research official at the Federal Reserve Bank of St Louis
适当通缩有利经济
十多年来，日本的物价上涨速度一直非常缓慢。有些时候，尤其是最近几年，日本甚至处于通货紧缩的状态。因为实际国内生产总值（GDP）的增长非常疲软，包括许多美国官员在内的大量观察家，都认为是通货紧缩造成了日本的经济滞胀。而且他们猛烈抨击日本领导人没有采取更激进的措施，以便遏制通货紧缩。 然而，通缩是日本经济中的一个亮点。实际上，日本的通缩是基于一些充分的理由而有意造成的，而且它并未成为经济快速增长的障碍。对政策制订者来说，了解日本的通缩问题至关重要，尤其是现在，美国可能很快就要面对通货紧缩这个问题了。 日本的通货膨胀率在1987年时为0.1％，到1991年上升到3.2％。1989年，政策制订者对此表示担忧，并且收缩银根。结果，通货膨胀率慢慢下降，到1995年已经下降到零。在这段时间，日本央行（Bank of Japan）的官员经常重申，他们的目标就是把服务业价格的增长速度降低到零。这就要求商品和资产的价格必须有所下降。总而言之，这就是一剂通缩的药方。日本政策的依据是米尔顿o弗里德曼（Milton Friedman）1969年在《最优货币数量及其他文集》（Optimum Quantity of Money and Other Essays）中的分析。他提出，最优货币政策应该是在保持工资和服务业价格稳定的基础上，允许商品和服务的总体价格水平的增速下降到与实际利率相当的水平。 即使这样，一些美国分析人士仍然争论说，日本几十年来的低增长是因为采取通缩政策的缘故。但是在1998年之前，日本并没有经历持续的通缩。事实上，自从1991年以来，伴随着经济衰退，日本的实际国民生产总值的平均增长幅度为1.1％，这并不是因为通货紧缩造成的。同时在1991－1998年期间，通货膨胀率从0.9％下降到了1998－2002年期间的负0.7％的水平，与此同时实际GDP增长也稍稍放缓了速度，从1.2%下降到0.9％。 日本的产出增长疲软是一个结构性问题。经济合作和发展组织（OECD，Organisation for Economic Co-operation and Development）的数据表明，如果在2002年，日本的生产潜力得到发挥，那么实质GDP的增长率也只会比2002年日本实现的增长率高2.9%，那么从1991年以来，日本产出率平均增长率为每年1.3％，而不是实际上的1.1％。即使没有经济周期所带来的低迷，日本的经济增长也会相当缓慢。 最近日本货币供应量爆炸性地增加，刺激了产出的增长，同时也结束了通货紧缩。通货紧缩从2001年底的1％降低到2002年底的0.5％，而且当年7月底通缩下降到只有0.2％。 遗憾的是，目前产出的增加是因为周期性的因素，并不会改变经济滞胀的长期趋势。OECD估计，潜在产出增长将会继续下降。 对通缩另一个错误的认识是，通缩损害了金融业。一些分析人士争论说，通缩是银行资产平衡表恶化的罪魁祸首。在某种程度上，他们是正确的，因为监管当局没有及时让一些无偿还能力的金融机构停业清盘，这是他们疏忽。资产状况良好的金融机构是净债权人。非预期的通缩，是收入和财富再分配的一种方式，对净债权人而言是有利的，如同非预期的通胀牺牲债权人的利益而有益于债务人一样。 如果价格变化的速度的确对银行造成了损害，这种损害发生在诸如美国的储蓄和贷款危机那样的情况下。首先，非预期的通货膨胀有可能吞噬了银行的一些资产，其次通货膨胀在没有预期的情况下减缓，会进一步损害净资产为负值的人们的利益，事实上就是那些净债务人的利益。对于那些已经被经济不景气造成的违约所伤害的金融机构来说，这种力量可能会进一步降低它们的净资产。 从本质上来看，通缩对金融业有利。因为它在不为人觉察的情况下，使收入发生有益于债权人的再分配。同时相对于收入和其他资产而言，银行存款更具有吸引力，因为货币的购买力增加，存款人通过持有现金可获得正实质收益。而通货膨胀在没有预期的情况下放缓，其所产生的周期性消极影响，可能会增加贷款违约数量，从而对银行资产造成损害。但是只要银行仍然有足够的资本金，并且维持净债权人的地位，通货紧缩本身的作用将会抵消这类成本。 美国的政策制订者认为，通缩会让我们付出巨大代价，因此必须采取额外的努力来避免通缩。日本货币政策的经验或者货币理论并不支持这一说法。适度的通缩对经济有利--尤其是对金融机构有利。即使把通货膨胀作为目标的政策制订者，也应该从广义上来理解价格稳定，将弗里德曼的思想和日本央行的经验囊括其中。
作者在芝加哥德保尔大学（DePaul University）讲授经济学，曾任圣路易斯联储银行的研究部官员。
