AskDefine | Define reflation

Dictionary Definition

reflation n : inflation of currency after a period of deflation; restore the system to a previous state

Extensive Definition

Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes. It is the opposite of disinflation. It can refer to an economic policy whereby a government uses fiscal or monetary stimulus in order to expand a country's output. This can possibly be achieved by methods that include reducing tax, changing the money supply, or even adjusting interest rates. Just as disinflation is an acceptable antidote to high inflation, reflation is considered to be an antidote to deflation (which, unlike inflation, is considered bad regardless how high it is).
Originally it was used to describe a recovery of price to a previous desirable level after a fall caused by a recession. Today it also (in addition to the above) describes the first phase in the recovery of an economy with increasing demand from a slump.
reflation in German: Reflation
reflation in Spanish: Reflación
reflation in Hebrew: רפלציה
reflation in Japanese: リフレーション
reflation in Norwegian: Reflasjon
reflation in Slovak: Reflácia
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