Price Deflation

The thesis deals with a monetary phenomenon of price deflation. In modern monetary theories, causes are sometimes confused with consequences. As to price deflation, consequences of causes of this phenomenon are often attributed to it while it is not a cause but a mere consequence. That's why we have identified causes of price deflation and their true consequences in the thesis. According to quantity theory of money, there are three main sources of price deflation as follows: decline in money supply, decline in velocity of circulation of money, and productivity growth. These causes are analyzed in detail, each of them in a single chapter. Price deflation is often associated with depressions while in some cases it might be a mere consequence of depression, not a cause. On the other hand, price deflation might also be a consequence of productivity growth (unless accommodated by increase in money supply) which makes it perfectly compatible with a healthy and growing economy