Stagflationsgefahren durch die Inflationswelle nach der Covid-19-Krise – Lehren aus den 1970er Jahren

Starting in 2021 in Germany and the European Monetary Union (EMU) as well a cost-driven inflation wave developed which was caused by increasing energy costs and food prices as well as distortions in global value chains. In case the strong inflationary wave leads to a wage-price spiral an inflationary dynamic is triggered which in the end forces the central bank to restrictive monetary policy and a stabilisation crisis with high economic costs. Comparable price shocks existed in the 1970s. At that time wage-price spirals could not be avoided. It came to monetary policy reactions and two costly recessions. In spite of real wage cuts after 2021 in Germany and the EMU nominal wages should increase according to the target inflation rate of the European Central Bank and trend productivity development. Recommendable is, in addition, a social contract between trade unions, employers’ associations and government with stronger wage increases for low-wage earners, government social policy and fiscal policy which compensates for the falling aggregate real demand caused by real income decreases