• International Area Studies Review
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• v.16 no.1
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• pp.147-171
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• 2012

Even though many people loosely term a period of high inflation combined with stagnation "stagflation", it has been very difficult for us to find a more detailed and theoretical definition for such a period. In addition, most economic policy makers have faced some uncertainty and difficulty in identifying stagflation periods through analyzing a lot of economic data. This paper deeply researches the literature on specific definitions of stagflation and provides an empirical method by which we can systematically identify real-time stagflation pressure. Under this method, real-time stagflation pressure can be evaluated as a complex index by using both extensive monthly economic data indicating economic conditions or inflation pressure and a logit regression model. As a result of applying this method to the first half of 2008 in Korea when there was much debate as to whether the Korean economy was experiencing a corresponding stagflation or not, this period is not now evaluated as having been a stagflation period. This paper provides some implications. Namely, we need to put more emphasis on stabilizing inflation expectations.