Economy
Stagflation
Definition
An economic condition combining stagnant growth, high unemployment, and high inflation — a situation that standard economic tools struggle to address.
Explanation
Stagflation was first identified during the 1970s oil crises when OPEC embargoes caused energy prices to spike, simultaneously raising inflation and causing recession. It's a policy nightmare because the standard response to inflation (higher interest rates) worsens unemployment, while the standard response to recession (lower rates) worsens inflation. Turkey and Argentina have experienced stagflation-like conditions in recent years.