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Working Paper No. 23. Deflation and Japan Revisited

PublicationWorking paper
Företagandets villkor, Inflation, Priser, Richard C.B. Johnsson
Working Paper No. 23.
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Abstract

Deflation counts among the worst things that could happen to an economy, the conventional wisdom tells us. But are falling prices really that bad? According to the Austrian School of Economics, this is not necessarily the case. A distinction is commonly made between (1) growth, (2) cash-building, (3) bank credit and (4) confiscatory deflation. When it comes to the first three kinds, falling prices are regarded as benign free market responses to changing circumstance, whether these are positive or negative by themselves. When it comes to the latter, it is often regarded as something negative. Lately, the word deflation has become almost synonymous with Japan and its economic problems. In this paper, the development of the Japanese economy of 1990-2001 is revisited. While consumer prices fell in 1995 and 1999-2001, if other prices are taken into account, it appears that the overall price level actually fell during most of the years throughout the period, 1997 and 2000 being exceptions. When it comes to the causes of the deflation, any confiscatory deflation created by the government is ruled out, since the money supply has been rising throughout the period. Instead, it is suggested that the deflation of 1994, 1995 and 1996 was exclusively caused by rising supply, i.e. there was growth deflation. This could also have been the case in 1991 and 1992, but the evidence is somewhat inconclusive. Moreover, deflation in 1993, 1998 and 2001 appears exclusively to have been caused by falling aggregate demand, suggesting cash-building or bank credit deflation. Finally, deflation in 1999 might have been caused by a combination of growth, cash-building and bank credit deflation. In all of these cases, the falling prices are to be regarded as benign. Although based on the same set of data, these findings diverge sharply from the official Japanese view of the economy at the time. This is ascertained by studying the official records of the time the consumer price index moved into the negative domain for the first time recorded. Instead of seeing this as something possibly benign, the conventional fear of deflation on the part of the Bank of Japan came to dominate its actions. And if it is true that falling prices are a benign response to the changes that actually occurred in Japan at the time, then any measures taken to make prices not fall cannot be of the benign nature. And if there were one thing most economists would agree on it would probably be that Japan’s economic malaise is not over. This seems to be an important lesson for the future – preventing a free market adjusting, including deflation, to changing circumstances could possibly prevent or prolong a recovery.

Johnsson, R.C.B. (2003). Deflation and Japan Revisited. Ratio Working Paper No. 23.

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Ratio Working Paper No. 349: Industrial conflict in essential services in a new era – Swedish rules in a comparative perspective
Working paperPublication
Karlson, N.
Publication year

2021

Published in

Ratio Working Paper

Abstract

This paper examines whether the Swedish regulatory system of dealing with industrial conflicts that affect essential services need an update or reform. Are the existing rules effective in a world where many essential services are upheld by many interdependent agents in complex systems where every single node becomes critical for the functioning of the system, and where the essential service activities could be either private or public? A comparative study is conducted with the corresponding regulatory systems of the United Kingdom, Germany, and Denmark.
The conclusion is that Sweden is a special case. The Swedish protection against and readiness in dealing with societally harmful industrial conflicts in essential services is weaker than in the countries of comparison. Just as in relation to other threats to essential services, it is not sustainable to claim that just because such a threat is not currently present, there would be no need for preparedness.
There are many alternative ways to handle this. Desirable methods should both prevent harmful conflicts from erupting and end conflicts that have grown harmful to society at a later stage. The labour market organisations should have a mutual interest in reforming the rules.

Ratio Working Paper No. 349: Industrial conflict in essential services in a new era – Swedish rules in a comparative perspective
Working paperPublication
Karlson, N.
Publication year

2021

Published in

Ratio Working Paper

Abstract

This paper examines whether the Swedish regulatory system of dealing with industrial conflicts that affect essential services need an update or reform. Are the existing rules effective in a world where many essential services are upheld by many interdependent agents in complex systems where every single node becomes critical for the functioning of the system, and where the essential service activities could be either private or public? A comparative study is conducted with the corresponding regulatory systems of the United Kingdom, Germany, and Denmark.
The conclusion is that Sweden is a special case. The Swedish protection against and readiness in dealing with societally harmful industrial conflicts in essential services is weaker than in the countries of comparison. Just as in relation to other threats to essential services, it is not sustainable to claim that just because such a threat is not currently present, there would be no need for preparedness.
There are many alternative ways to handle this. Desirable methods should both prevent harmful conflicts from erupting and end conflicts that have grown harmful to society at a later stage. The labour market organisations should have a mutual interest in reforming the rules.

Ratio Working Paper No. 348: Regional collaboration to enhance recruitment to rural regions
Working paperPublication
Nyström, K.
Publication year

2021

Published in

Ratio Working Paper

Abstract

The purpose of this paper is to study how municipalities work at the regional level with issues concerning skills shortages and recruitment. What information channels are used to obtain information about these shortcomings? How and with whom do the municipalities collaborate? This study provides a mapping of how collaboration between employers, regional policymakers, and other institutions works with regional recruitment. As such, this study provides important information and possible inspiration. The empirical findings obtained based on a survey targeted to the business sections in Swedish municipalities suggest that companies in rural regions turn to municipalities to a greater extent than companies in non-rural municipalities in regard to skills shortages and recruitment. In addition, it is perceived that there is a higher degree of cooperation between businesses and local politicians in regard to recruitment in rural municipalities compared to other municipalities. Even cooperation to develop competence at the regional level is thought to take place to a greater extent in rural municipalities than in non-rural municipalities.

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