Making the case for higher inflation

My AS students were last week writing about the economic costs and benefits of price inflation and price deflation - I was pleased that they managed to see through some of the intuitively attractive aspects of price deflation (cheaper iPhones, clothing and technology prices) to show their awareness of the impact that sustained deflation can have on business revenues, profits, jobs and ultimately real wages and jobs. In this piece in the Guardian Kenneth Rogoff makes the case for the world economy needing a burst of ‘moderate inflation - which he defines as annual price increases of around 6 per cent for two or three years. Rogoff Article