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PPGPortal > Home > Concept Dictionary > S > Stagflation
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Stagflation
If inflation is occurring and real output is falling simultaneously, the economy is said to be experiencing “stagflation”.
(Peter Dungan, PPG1002H)
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Stagflation usually occurs due to a negative aggregate supply shock. The most damaging period of stagflation in recent history occurred due to the oil shocks of the early 1970s, during which the rapid price increase of a very important imported commodity created a powerful aggregate supply shock that caused a prolonged period of stagflation.
References
Dungan, Peter. Class Lecture. PPG1002H Microeconomics for Policy Analysis. University of Toronto School of Public Policy and Governance.
Mankiw, N.G., Kneebone, R.D., McKenzie, K.J., Rowe, N. Principles of Macroeconomics: Third Canadian Edition. Harcourt Brace Canada: Toronto, 2004
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Stagflation
If inflation is occurring and real output is falling simultaneously, the economy is said to be experiencing “stagflation”.
(Peter Dungan, PPG1002H)
------------------------
Stagflation usually occurs due to a negative aggregate supply shock. The most damaging period of stagflation in recent history occurred due to the oil shocks of the early 1970s, during which the rapid price increase of a very important imported commodity created a powerful aggregate supply shock that caused a prolonged period of stagflation.
References
Dungan, Peter. Class Lecture. PPG1002H Microeconomics for Policy Analysis. University of Toronto School of Public Policy and Governance.
Mankiw, N.G., Kneebone, R.D., McKenzie, K.J., Rowe, N. Principles of Macroeconomics: Third Canadian Edition. Harcourt Brace Canada: Toronto, 2004.
Approved for glossaryposting by Ben Eisen on January 8, 2011 | |
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