Unemployment and Inflation: The Natural Wage Rate Hypothesis

  • Michihiro Ohyama
Part of the Advances in Japanese Business and Economics book series (AJBE, volume 14)


We have witnessed at least two distinct types of economic depression in the current century, aptly named “stagnation” and “stagflation,” respectively. Stagnation refers to the situation in which the general price level (or the rate of inflation) declines together with the quantitative indices of aggregate economic activities such as output and employment. Needless to say, a most important example of stagnation is the Great Depression, which began in 1929 and extended into the 1930s. In contrast, an economy is said to suffer from stagflation when the general price level (or the rate of inflation) rises in the face of falling output and employment. This form of depression was observed most typically in industrialized countries from the late 1960s and through the 1970s when they were exposed to wage explosions, oil price hikes, and other cost-increasing pressures.


Labor Productivity Wage Rate Money Supply Rational Expectation Phillips Curve 
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Copyright information

© Springer Japan 2016

Authors and Affiliations

  • Michihiro Ohyama
    • 1
  1. 1.Professor EmeritusKeio UniversityTokyoJapan

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