Cybernetics and Systems Analysis

, Volume 54, Issue 2, pp 258–270 | Cite as

Deflationary Regulation of Market Equilibrium

  • B. B. Dunaev
  • L. V. Kirilenko


Deflation in economy is defined as a result of reduction of the amount of money in circulation by the Central Bank and the financial sector, which violated the equilibrium. The equilibrium can be restored by the market system in the process of regulating the production of goods through reduction in the number of employed in the production sector in the context of consumer demand. To restore the growth of production of goods and overcome deflationary period, the Central Bank, at the cost of capital employed in production, should establish the amount of money in circulation that ensures the necessary level of inflation. As a result, overcoming the deflation leads to a financial catastrophe with high unemployment and hyperinflation.


economy market demand supply equilibrium labor capital money conjuncture reproduction investment depreciation inflation deflation 


  1. 1.
    B. B. Dunaev, Well-Being: Labor, Capital, and Money. Fundamentals of Reproduction Theory [in Russian], Interdruk, Kyiv (2013).Google Scholar
  2. 2.
    B. B. Dunaev, “Non-inflationary consumer demand,” Cybern. Syst. Analysis, Vol. 52, No. 4, 588–599 (2016).MathSciNetCrossRefzbMATHGoogle Scholar
  3. 3.
    B. B. Dunaev, “Dynamics of economic cycles,” Cybern. Syst. Analysis, Vol. 53, No. 2, 293–307 (2017).MathSciNetCrossRefzbMATHGoogle Scholar
  4. 4.
  5. 5.
    V. G. Varnavskii, “Postcrisis development: Inflation vs deflation,” World Economy and International Relations, No. 1, 5–16 (2017).Google Scholar
  6. 6.
    “Great Depression of 1873–1896. Business cycles and depressions,” An Encyclopedia, Garland Publishing, New York (1997), pp. 148–149.Google Scholar
  7. 7.
    M. N. Rothbard, America’s Great Depression, BN Publishing (2009).Google Scholar
  8. 8.
    E. L. Leontieva, “Deflationary crisis in Japan,” Economic Journal of VShE, No. 3, 353–401 (2006).Google Scholar
  9. 9.
    “World economic outlook: Too slow for too long,” IMF, Washington DC, April, 168–177 (2016).Google Scholar
  10. 10.
    “Monetary policy decisions,” Press Release, ECB, January 19 (2017), URL:
  11. 11.
    “ECB announces expanded asset purchase programme,” Press Release, ECB, January 22 (2015), URL:
  12. 12.
    M. Draghi, “Introductory statement to the press conference (with Q&A),” January 19 (2017), URL:
  13. 13.
  14. 14.
    C. Borio, M. Erdem, A. Filardo,, and B. Hofmann, “The costs of deflations: A historical perspective,” BIS Quarterly Review (2015), pp. 31–54.Google Scholar
  15. 15.
    B. B. Dunaev, “Macroeconomic governmental regulation and self-regulation of market equilibrium,” Cybern. Syst. Analysis, Vol. 42, No. 5, 702–713 (2006).MathSciNetCrossRefzbMATHGoogle Scholar
  16. 16.
    B. B. Dunaev, “Monetary control of economic equilibrium,” Cybern. Syst. Analysis, Vol. 48, No. 2, 205–216 (2012).MathSciNetCrossRefzbMATHGoogle Scholar
  17. 17.
    J. D. Sachs and F. Larrain, Macroeconomics in the Global Economy, Prentice Hall (1993).Google Scholar
  18. 18.
    V. M. Gorbachuk, Macroeconomic Methods [in Ukrainian], Alterpress, Kyiv (1989).Google Scholar
  19. 19.
    V. M. Gorbachuk, Macroeconomic Methods: Theories and Application [in Ukrainian], Kii, Kyiv (1989).Google Scholar
  20. 20.
    B. B. Dunaev, “Money supply and interest rate in economics equilibrium,” Cybern. Syst. Analysis, Vol. 46, No. 1, 115–128 (2010).MathSciNetCrossRefzbMATHGoogle Scholar
  21. 21.
    B. B. Dunaev, “Calculating gross domestic product as a function of labor and capital,” Cybern. Syst. Analysis, Vol. 40, No. 1, 86–96 (2004).MathSciNetCrossRefzbMATHGoogle Scholar
  22. 22.
    B. B. Dunaev, “Measuring unemployment and inflation as wages functions,” Cybern. Syst. Analysis, Vol. 41, No. 3, 403–414 (2005).MathSciNetCrossRefzbMATHGoogle Scholar
  23. 23.
    B. B. Dunaev, “Optimizing the growth of real gross domestic product,” Cybern. Syst. Analysis, Vol. 49, No. 1, 98–109 (2013).MathSciNetCrossRefzbMATHGoogle Scholar
  24. 24.
    B. B. Dunaev, The rate of growth of the wage rate as a function of unemployment rate,” Cybern. Syst. Analysis, Vol. 47, No. 5, 791–799 (2011).MathSciNetCrossRefzbMATHGoogle Scholar
  25. 25.
    B. B. Dunaev, “Dynamics of public debt management,” Cybern. Syst. Analysis, Vol. 49, No. 6, 865–876 (2013).MathSciNetCrossRefzbMATHGoogle Scholar
  26. 26.
    B. B. Dunaev, “Dynamics of welfare of the population of a country,” Cybern. Syst. Analysis, Vol. 51, No. 2, 291–302 (2015).MathSciNetCrossRefzbMATHGoogle Scholar
  27. 27.
    O. Coibion and Y. Gorodnichenko, “Is the Phillips curve alive and well after all? Inflation expectations and the missing disinflation,” American Economic Journal: Macroeconomics, Vol. 7, No. 1, 197–232 (2015).Google Scholar
  28. 28.
    R. J. Gordon, “The Phillips curve is alive and well: Inflation and the NAIRU during the slow recovery,”. NBER Working Paper, No. 19390, August (2013).Google Scholar
  29. 29.
    A. Stevens, “What inflation developments reveal about the Phillips curve: Implications for monetary policy,” Economic Review, National Bank of Belgium (2013).Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Academy of Financial Management, Ministry of Finance of UkraineKyivUkraine
  2. 2.Engineering Center of the NAS of UkraineKyivUkraine

Personalised recommendations