Recent Views
Until recently no macroeconomic policy had been able to predict the occurrence of stagflation.
After the fact, and several years of research, a convincing explanation was provided based on the effects of adverse supply shocks on both prices and output. According to Blanchard (2009), these adverse events were one of two components of stagflation; the other was "ideas", which Robert Lucas (famous for the Lucas Supply Curve), Thomas Sargent, and Robert Barro were cited as expressing as "wildly incorrect" and "fundamentally flawed" predictions which, they said, left stagflation to be explained by "contemporary students of the business cycle". In this discussion, Blanchard hypothesizes that the recent oil price increases could trigger another period of stagflation, although this has not yet happened (pg. 152).
Read more about this topic: Stagflation
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“Meek young men grow up in libraries, believing it their duty to accept the views which Cicero, which Locke, which Bacon, have given, forgetful that Cicero, Locke, and Bacon were only young men in libraries, when they wrote these books. Hence, instead of Man Thinking, we have the book-worm.”
—Ralph Waldo Emerson (1803–1882)
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