What is the definition of stagflation in economics?
In economics, stagflation, or recession-inflation, is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
Is there a consensus on the causes of stagflation?
There is no consensus among economists on the causes of stagflation. Each economics school offers its own view on its origins. However, two main theories may be derived: supply shock and poor economic policies.
When did stagflation start in the United States?
The most notable one occurred in the 1970s in the United States. The onset of stagflation In the 1970s was blamed on the US Federal Reserve’s unsustainable economic policy during the boom years of the late 1950s and 1960s.
What does stagflation have to do with deer?
Thus the term Stagflation… it has nothing to do with Deer. In other words, in stagflation prices are going up while the economy is going down. The word was coined during the inflationary period of the 1970’s. Under normal conditions one would expect inflation to heat up the economy i.e. increase buying demand.
Stagflation is characterized by slow economic growth and relatively high unemployment—or economic stagnation —which is at the same time accompanied by rising prices (i.e. inflation). Stagflation can be alternatively defined as a period of inflation combined with a decline in gross domestic product (GDP).
Who was the first person to use the term stagflation?
The term „stagflation“ was first used during a time of economic stress in the United Kingdom by Iain Macleod in the 1960s while he was speaking in the House of Commons. At the time, he was speaking about inflation on one side and stagnation on the other, calling it a „stagnation situation.“.
Which is the best macroeconomic remedies for stagflation?
Stagflation is an economic condition that combines slow growth and relatively high unemployment with rising prices, or inflation. The standard macroeconomic remedies for inflation or unemployment are considered ineffective against stagflation. In fact, there is no universal agreement on the best way to stop stagflation.
What did the stagflation of the 1970s mean?
The decade of 1970s through 1980s has seen a new phenomenon called ‘stagflation’. It is characterized by excessive money supply and high prices on the one hand and declining productivity and unemployment on the other hand.