Date of Award

Spring 2016

Degree Name

Bachelor of Science

Major

Economics

First Advisor

Joshua Stillwagon

Second Advisor

William Butos

Abstract

This paper will look at deflation and its relationship to economic output. This is an area of economic research that has received relatively little attention and, where it has, researchers disagree as to the how the two variables relate. In order to explore these questions, the following analysis will consider data from a sample of eight countries in VAR equations to look at the relationship between prices and economic output since the mid-1800s with control variables to limit potential omitted variable bias, and Granger-causality testing as well as impulse response testing to further analyze obtained results. The resulting analysis provides evidence that there is no general relationship between deflation and economic output, and that in many cases changes in price is not significant in determining changes in economic output.

Comments

Senior thesis completed at Trinity College, Hartford, Connecticut for the degree of Bachelor of Science in Economics.

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