Cde Monomotapa wrote:Stagflation. Case study: 2000-2009 Zimbabwe.
stagflation: a case of high unemployment rates and high inflation rates as was the case with Zimbabwe.
Are kenyan youth actively seeking employment opportunities? Yes, but most of them do not have skills to offer. That is why they are so easily recruited by alshabab, Mungiki and MRC infidels.
Do we risk running high inflation rates like zimbabwe? No. We have adequate monetary and fiscal policies to take care of inflation. The problem is finding an optimal rate of inflation that will not hurt the economy while not contracting our total output.
Interestingly, the media has misled the public to belief that inflation is bad for the economy. While this perception is not entirely untrue, it is incomplete. Unemployment rate and inflation rate share an inverse relationship. Therefore, reducing inflation to very low rates is likely to result in increased cyclical unemployment as workers are laid off by their employers due to decreased returns.
The challenge we face is understanding our sources of inflation and responding decisively. For example, if the inflation is caused by increased demand of good and services, aggregate supply will have to be increased which would result in reduced unemployment.