The first phase of economic recovery after a period of contraction. This is usually accompanied by actions from the government and central banks. They engage in fiscal and monetary policy to stimulate the economy in an effort to offset the effects of deflation.
Some of the ways this is done is through expansion of the monetary base, infrastructure spending projects, lowering of interest rates, and direct payments to citizens.
The goal is to expand economic productivity while getting people to spend money.
When the inflation rate goes below 0%, it is a sign there is excess capacity in the labor market. The central planners seek to stimulate the real economy through abovementioned methods to pull more people into the workforce.
Many countries have tried to apply this in different ways. The constant is none were able to circumvent the business cycle.
