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THE 1920‐21 DEFLATION: THE ROLE OF AGGREGATE SUPPLY
Author(s) -
VER J. R.
Publication year - 1991
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1991.tb00847.x
Subject(s) - deflation , aggregate supply , economics , aggregate demand , keynesian economics , aggregate (composite) , monetary economics , supply and demand , macroeconomics , monetary policy , materials science , composite material
World War I was followed by an extremely sharp deflation in 1920–1921. Most treatments have attributed this deflation to a decline in aggregate demand. This paper, noting that the deflation was not only large, but large relative to the accompanying decline in real product, argues that it was caused by a decline in aggregate demand combined with an increase in aggregate supply.