1. Economic stagnation and rising prices together?

  A word that is often used in the economy these days can be seen as inflation. Starting with the rise in the US base rate, interest rates around the world have similarly increased. Also, the global economy is suffering from high prices and there are even fears of a recession.


In addition, the August consumer price index in the euro area also exceeded 9%, and although the July big step prices were grasped, it was completely useless, and there were many talks about the giant step in the euro area. It seems that the rise in energy prices due to the Russian gas supply problem has not played a decisive role in the Eurozone CPI rise.


The US Federal Reserve System and the European Central Bank are trying to keep prices down by raising interest rates, but inflation is getting worse every day, and the economy is stagnating, which is seen as stagflation. There are various premonitory symptoms, but I will investigate stagflation that I do not want to happen.


 2. The meaning of stagflation

 Stagflation is an economic term that combines stagnation and inflation, and is an economic term that describes a situation where prices rise coexisting in an economic recession. Production, consumption and investment indicators all fell, showing a decline in troubles again for the first time in four months. I am concerned about stagflation that the consumer sentiment, which is gradually recovering from the coronavirus, will be atrophied again due to high prices. We also need to know the Phillips curve to discuss prices and recessions. The Phillips curve is a graph that shows the inverse relationship between the unemployment rate and the nominal wage increase rate. It can be seen that the lower the unemployment rate, the higher the wage increase rate, and the higher the unemployment rate, the lower the wage increase rate. . If we deal with the inflation rate for the nominal deposit rate, we can change it like this. Low unemployment leads to higher inflation, and higher unemployment leads to lower inflation. In other words, we can see that the unemployment rate is inversely related to prices.


3. Finish

 I researched stagflation in economic terms. Economic terms that are described in composite terms often diverge from traditional economic phenomena and logic. So if you know the original theory and investigate the phenomenon, I think it will be a little more useful for understanding. Finally, I end today's post with the hope that this horrific stagflation never hits the world.