Nicholas Smith had an interesting analysis on this issue called "Does deflation even matter?"
http://www.realestate.co.jp/insider-guide/2012/05/14/sm
ith-on-deflation-in-japan-its-not-always-a-bad-thing/
http://www.bloomberg.com/news/2012-04-13/deflation-isn-
t-always-so-bad-just-ask-japan.html

I think I can dig up the original analysis if anyone is interested.

This is probably the number 1 question to me ever since I've been here in Japan, and I still can't figure out a proper answer. But I firmly think that deflation is a symptom, and not the root of Japan's economic problems, as politicians tend to describe deflation. It's the politicians who likes to talk a lot about deflation and put the issue into focus suggesting that if deflation can be overcome then all problems are solved.

As Prof Katz rightly puts it, there can be different causes behind deflation. Moreover, even the definition of inflation/deflation is not solid among economists.
For Austrians inflation means the increase of the money supply (and not the rise of price level) and deflation means its opposite. Prof Katz also rightly highlighted that when it is spoken about deflation, the term is often used for something else, like recession.

Gabor Seprenyi
Embassy of Hungary