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stagflation Definition Glossary of Finance Terms - Stagflation

Stagflation : Stagflation results when a recession, or economic stagnation, is combined with inflation (decrease in value of the currency). This usually occurs when governments promote inflation (which is often seen as a positive result of a growing economy) and increase the money supply at a time when the economy is relatively stagnant as a result of either government regulations of goods or services or other economic inhibitors.
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The term "stagflation" was first used by Iain Macleod in the British Parliament in 1965 when he was referring to the postwar recession and inflation. At the time, some politicians and critics blamed the governments for printing too much money and at the same time having too many regulations on prices and goods. In general, most politicians choose to solve either the recession or the inflation but rarely try and solve both parts of stagflation simultaneously.

Also called : Stagflationary Economy, to Stagflate.

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