There are some firms that have shaken off the deflationary mindset and have proactively embarked on new initiatives. When more firms follow suit, this will give rise to a virtuous cycle in the economy as a whole, with prices rising moderately as wages and productivity increase, leading to sustainable economic growth.
But sometimes they aren’t, most notably around the time of the onset of the financial crisis in 2007– 08, when estimates of the neutral rate declined rapidly and significantly. Currently, there is a debate in the US as to whether the neutral rate of interest has bottomed and is shifting up.