What about the deleterious effects of deflation? One worrisome effect of deflation is that if wages are downwardly-sticky, real wages rise and cause unemployment.
Yet Japanese unemployment has averaged 4.5% between 2000–2014, compared to 6.4% in the US and 9.4% in the Euro area during the same period.8 In part, the Japanese have obtained wage flexibility by moving away from the old lifetime unemployment contracts for new hires to short term contracts.