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{{ safesubst:#invoke:Unsubst||$N=Use British English |date=__DATE__ |$B= }} {{ safesubst:#invoke:Unsubst||$N=Use dmy dates |date=__DATE__ |$B= }} In economics, stagflation, a portmanteau of stagnation and inflation, is a situation in which the inflation rate is high, the economic growth rate slows, 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 term is generally attributed to a British Conservative Party politician who became chancellor of the exchequer in 1970, Iain Macleod, who coined the phrase in his speech to Parliament in 1965.<ref>Online Etymology Dictionary. Douglas Harper, Historian. (accessed 5 May 2007).</ref><ref>British House of Commons' Official Report (also known as Hansard), 17 November 1965, page 1,165.</ref><ref name=BankofEngland2002> {{#invoke:citation/CS1|citation |CitationClass=report }}Introduction, page 9.</ref><ref name=macroeconomics> {{#invoke:citation/CS1|citation |CitationClass=book }} page 464</ref> <ref group=notes>Nelson and Nikolov also point out that the term 'stagflation' has sometimes been erroneously attributed to Paul Samuelson.</ref>

Keynes did not use the term, but some of his work refers to the conditions that most would recognise as stagflation. In the version of Keynesian macroeconomic theory that was dominant between the end of World War II 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, both in social terms and in budget deficits.

One economic indicator, the misery index, is derived by the simple addition of the inflation rate to the unemployment rate.

Stagflation sections
Intro  The Great Inflation  Causes  Postwar Keynesian and monetarist views  Recent views  Neoclassical views  Alternative views  Responses  See also  Notes  References  Further reading  

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