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the claim
Increased cash hoarding causes deflationary spirals and reduced aggregate demand.
the verdict
SUPPORTED
the evidence backs this
Recorded sources
4 sources for · 0 against
Is it true that increased cash hoarding causes deflationary spirals and reduced aggregate demand?
Yes. Economic literature consistently shows that increased precautionary savings and cash hoarding reduce aggregate demand and place downward pressure on prices, contributing to deflationary spirals.
Verdict: SUPPORTED · 4 sources for, 0 against · Last checked
The analysis
Papers 0, 1, 2, and 5 all directly support the claim that increased savings or cash hoarding reduces aggregate demand and induces deflationary pressures or spirals. No provided papers refute this connection.
Evidence for · 4
Demonstrates that a rise in money demand and savings puts downward pressure on prices, magnifying business cycles and interacting with sticky wages.
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Haan, W. J. D., Haan, W. J. D., Haan, W. J. D., Rendahl, P., & Riegler, M. (2015). Unemployment (fears) and Deflationary Spirals. doi.org. https://doi.org/10.17863/CAM.16656
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More for · 3
Shows that precautionary savings and higher desired cash holdings raise unemployment risk and cause aggregate demand to fall in a deflationary spiral.
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Challe, E. (2020). Uninsured Unemployment Risk and Optimal Monetary Policy in a Zero-Liquidity Economy. doi.org. https://doi.org/10.1257/mac.20180207
Indicates that rising precautionary savings and lower consumption during economic shocks lower inflation and depress output.
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S, A. & A, E. (2020). The macroeconomic effects of lockdown policies.. doi.org. https://doi.org/10.1016/j.jpubeco.2020.104260
Finds that forced savings and higher post-crisis savings play a central role in explaining extreme drops in private domestic demand.
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R, C., O, C., M, G., P, P., M, R., & L, V. (2022). The euro area's pandemic recession: A DSGE-based interpretation.. doi.org. https://doi.org/10.1016/j.jedc.2022.104512
Receipt History
first checked04 Aug 2026
judged → SUPPORTED · 8804 Aug 2026
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