Stagflation
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In economics, stagflation is a situation in which 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 portmanteau stagflation (of inflation and stagnation) is generally attributed to British politician Iain Macleod, who coined the phrase in his speech to Parliament in 1965.
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.
In the political arena, one measure of stagflation, termed the Misery Index (derived by the simple addition of the inflation rate to the unemployment rate), was used to swing presidential elections in the United States in 1976 and 1980.
Read more about Stagflation: Causes, Recent Views, Neoclassical Views, Responses