Here is Izabella Kaminska of the FT:
Robots, automation and technology may not be responsible for all the deflation experienced in Japan since 2000, but if they play a role — any role — is it really fair to call this deflation? Is there perhaps a difference between good deflation and bad deflation that we should now be differentiating?
Yes there is. Indeed there’s a pretty large literature distinguishing between good and bad deflation (George Selgin, David Beckworth, and many others.)
Now what macroeconomic variable would allow us to distinguish between good and bad deflation?
Just one more reason to stop talking about inflation. Kaminska continues:
Our crisis was very much Japan’s reflation opportunity. Yes a fair bit of the pick-up in inflation came from energy and food, but one does have to wonder if there is a bit of a whack-a-mole situation going on here. In other words, if Japan truly succeeds at reducing deflation (a.k.a importing inflation from abroad) then to what degree will this just resend deflation back abroad?
The sensible policy would be for all countries (with demand shortfalls) to depreciate their currencies at the same time. Not against other currencies, but against goods and services. It’s not a zero sum game.
HT: Daniel Sherry
PS. For new readers, the answer is NGDP.