stagflation

Stagflation, a portmanteau of stagnation and inflation, is a term used in economics to describe a situation where the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa. The term is generally attributed to a British Conservative Party politician who became chancellor of the exchequer in 1970, Iain Macleod, who coined the phrase in his speech to Parliament in 1965. Keynes didn’t use the term, but some of his work refers to the conditions most would recognise as stagflation. In the version of Keynesian macroeconomic theory which was dominant between the end of WWII and the late-1970s, inflation and recession were regarded as mutually exclusive, the relationship between the two being described by the Phillips curve. Stagflation is very costly and difficult to eradicate once it starts, in human terms as well as in budget deficits. One economic indicator, the misery index, is derived by the simple addition of the inflation rate to the unemployment rate.

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Nathan Tarrant

Nathan has worked in financial services, marketing, and strategic business growth for over 30 years, as well as working in internet marketing since 1998.

In 2008 after the financial crash, Nathan operated as a financial & investment advisor to delegates of the United Nations, the World Health Organization, and senior managers of Fortune 500 companies in Geneva Switzerland.

He started Gold Trends as he enjoys working with alternative investments, having advised on them in the past.

Please note: Nathan is no longer a financial or investment advisor. The information he shares on this site is purely for education and information purposes only. You can read more on the About page

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Written by Nathan Tarrant