A-Z Popular Blog Economics Search »
Investing
 Advertisements
Related Guides
Investing
top   »  economics   »  economic conditions   »  inflation   »  inflation vs stagflation   »  stagflation

What is Stagflation?

 , updated on May 31, 2016
Stagflation is a period of high inflation, low economic growth and high unemployment. In theory, it should be somewhat rare because inflation is usually driven by economic growth. Stagflation typically results from severe economic mismanagement or over-reliance on a single commodity that makes an economy sensitive to shortages and price increases.
The world economy experienced stagflation in the mid-1970s as a result of increases in the price of oil. At the time, economic models struggled to explain the phenomena because inflation and severe recessions were viewed as opposites.
Increasing interest rates tends to fight inflation buts hurts economic growth. Therefore, it is difficult to manage stagflation with monetary policy.
Stagflation typically resolves itself because inflation gives consumers incentive to buy quickly as prices are always going up. In the case that stagflation is created by a commodity supply shock, innovation will find ways around the commodity and capital investment will find ways to produce more of it.
Overview: Stagflation
TypeEconomic Problem
DefinitionA period of high inflation, low economic growth and high unemployment.
Potential CausesSupply shocks
Over-dependence on a single commodity.
A mismanaged economy such as price controls resulting in shortages or an extreme expansion of money supply.
Related ConceptsInflation vs Stagflation
Economic Problems
Economics

Thinking

This is the complete list of articles we have written about thinking.
Abductive Reasoning
Abstract Thinking
Abstraction
Aesthetics
Analogy
Analysis Paralysis
Analytical Thinking
Anomie
Argument From Silence
Arrow Of Time
Assertions
Automaticity
Backward Induction
Base Rate Fallacy
Benefit Of Doubt
Big Picture
Brainstorming
Call To Action
Catch 22
Causality
Choice Architecture
Circular Reasoning
Cognition
Cognitive Abilities
Cognitive Biases
Cold Logic
Collective Intelligence
Complexity Bias
Concept
Consciousness
Constructive Criticism
Convergent Thinking
Counterfactual Thinking
Creative Tension
Creeping Normality
Critical Thinking
Culture
Curse Of Knowledge
Decision Fatigue
Decision Framing
Decision Making
Design Thinking
Divergent Thinking
Educated Guess
Emotional Intelligence
Epic Meaning
Essential Complexity
Excluded Middle
Failure Of Imagination
Fallacies
Fallacy Fallacy
False Analogy
False Balance
False Dichotomy
False Equivalence
First Principles
Formal Logic
Four Causes
Fuzzy Logic
Generalization
Golden Hammer
Good Judgement
Grey Area
Groupthink
Heuristics
Hindsight Bias
Hope
Idealism
Ideas
If-By-Whiskey
Imagination
Independent Thinking
Inference
Influencing
Informal Logic
Information
Information Cascade
Introspection
Intuition
Inventive Step
Learning
Lifestyle
Logic
Logical Argument
Logical Thinking
Ludic Fallacy
Magical Thinking
Meaning
Mental Experiences
Mental State
Mindset
Misuse of Statistics
Natural Language
Nirvana Fallacy
Norms
Objective Reason
Objectivity
Opinion
Overthinking
Perception
Personal Values
Perspective
Positive Thinking
Practical Thinking
Pragmatism
Problem Solving
Proof By Example
Propositional Logic
Prosecutor's Fallacy
Radical Chic
Rational Thought
Realism
Reality
Reason
Reasoning
Red Herring
Reflective Thinking
Relativism
Salience
Scarcity Mindset
Scientism
Selective Attention
Serendipity
Situational Awareness
Sour Grapes
State Of Mind
Storytelling
Subjectivity
Systems Thinking
Thinking
Thought Experiment
Unknown Unknowns
Visual Thinking
Want To Believe
Whataboutism
Win-Win Thinking
Wishful Thinking
Worldview
If you enjoyed this page, please consider bookmarking Simplicable.
 
Cite »

Alpha vs Beta

The difference between two common investment measurements.

Regression Toward The Mean

An overview of Regression Toward The Mean.

Efficient Market Hypothesis

An overview of the Efficient Market Hypothesis.

Animal Spirits

An overview of animal spirits, a theory of investing.

Financial Markets

A definition of financial market with examples.

Mr Market

A definition of Mr. Market, an investing theory.

Organic Growth

A definition of organic growth with examples.

Concept Company

The common types of concept company.

Information Costs

A definition of information costs with examples.

Channel Check

The definition of channel check with examples.

Economic Theories

A list of economic theories that are particularly useful for business.

Adverse Selection

The tendency for people at high risk to buy insurance.

Economic Advantage

A list of economic positions or capabilities that allow you to outperform in a particular industry.

Knowledge Work

A definition of knowledge work with examples.

Production

A definition of production with examples.

Post Scarcity

An overview of post-scarcity.

Economic Infrastructure

The common types of economic infrastructure.

Business Competition

The common types of business competition.

Inefficiency

The common types of inefficiency.

Supply Examples

An overview of supply with common examples.

Trending

The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map
Capital
Competition
Consumer Behavior
Economic Conditions
Economic Systems
Economics
Entrepreneurship
Finance
Financial Analysis
Goods
Government
Industries
Infrastructure
Innovation
Investment
Marketing
Marketing Economics
Markets
Microeconomics
Pricing
Productivity
Quality Of Life
Risk
More ...
© 2010-2023 Simplicable. All Rights Reserved. Reproduction of materials found on this site, in any form, without explicit permission is prohibited.

View credits & copyrights or citation information for this page.

Home About     Privacy Policy     Cookies Terms of Use     Contact Us Search


Cookies help us deliver our services. You have choices regarding these cookies. Please visit our privacy policy, cookie policy and consent tool to learn more.


Copyright 2002-2023 Simplicable. All rights reserved. This material may not be published, broadcast, rewritten, redistributed or translated. Report violations here.