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«[ChatGPT]

The mechanism you describe—namely the Friedman-style (Monetarism Mark I) wage-adjustment mechanism—contains elements that are economically plausible, but it also differs somewhat from Friedman's own theory.

To organize your argument:

1. A supply shock occurs.

2. Prices rise (cost-push inflation).

3. The central bank raises interest rates.

4. Corporate profits and financing conditions deteriorate.

5. Firms become reluctant to raise nominal wages.

6. Real wages remain depressed.

7. Economic stagnation and inflation coexist.

This sequence is indeed one of the classic explanations of stagflation.

Following the oil crises of the 1970s in Europe and North America, the following occurred simultaneously:

- Sharp increases in oil prices
- Rising consumer prices
- Declining real incomes
- Slowing economic growth

Therefore, the claim that:

«If higher interest rates reduce firms' ability to raise wages and delay the recovery of real wages, stagflation may persist longer»

is logically consistent.

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