Re:
by paulpauper on Saturday October 29, 2022 @02:20AM
(#33381483)
Higher unemployment is generally deflationary according to mainstream economic theory and empirical evidence
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Correlation or causation though? If it's correlation then higher unemployment is not in and of itself deflationary, it's just that whatever causes higher unemployment also causes reduced inflation. A non-causal link makes more intuitive sense than a direct causal link: as we go from monetary stimulus (having too much money) to monetary contraction (having too little money), demand for labour cools, as does the rate of increases in the price level.