Stagflation: Yesterday and today

Abstract

The great western financial crises caused by stagflation are reviewed. Historical relativism is considered in which the economic analysis begins by realistically summarizing the object of study. It is not intended to build a neoclassical law that explains the way in which stagflation occurs as a deterministic application of the cross between stagnation and inflation; Rather, on the contrary, the stagflation event of the 1970s is recapitulated as a unique and unrepeatable event. Instead of referring to the balances of the 1970s; just as the neoclassicals do; to apply the comparative statics with the balances of 2003; path dependence is applied very differently to understand the causality of stagflation in 2003. The latter essentially consists of a secular tendency to financial crises, in this case stagflationary. It is highly doubted that the 2023 stagflation will disappear before December 31 of this year. Similarly, that interest rate increases stop stagflation to make the economy land softly. Although the Glorious Thirty 1945 to 1975 recorded the creation of institutions and organizations providing general prosperity, it would be a serious mistake to believe that such institutional endowments can continue today, because reality is anergodic, and because great threats mortgaged the high growth of the product with low inflation. Looking to the 1970s to understand 2023 can help to face this uncertainty.