Journal Article

Successful vs. Failed Disinflations: An Event Study

Abstract: The U.S. did not experience large decreases in production or employment during the disinflation of 2022-2024. To put this unusually costless disinflation in context, this article characterizes the behavior of economic variables from more than 100 disinflation episodes in OECD countries. We decompose these episodes into those that successfully reduced inflation over several years, those in which inflation substantially rebounded, and the most recent episodes of 2022-2024. Successful episodes show several differences in comparison to failed episodes, including lower real interest rates and higher stock prices. The recent disinflations of 2022-2024 sometimes resemble successful episodes, but with essentially no average output loss. By characterizing the behavior of recent episodes, as well as historical disinflations with differing outcomes, we create a set of stylized facts to guide analysis of disinflation policies.

JEL Classification: E31;

https://doi.org/10.20955/r.2026.03

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Review

Publication Date: 2026-03-25

Volume: 108

Issue: 3

Pages: 1-26