In modern macroeconomics, a situation that combines a depressive state of the economy, an economic downturn and a rise in prices is referred to as stagflation. This term was formed from a combination of two economic concepts "inflation" and "stagnation". Stagflation is a relatively new phenomenon that has emerged as a result of the emergence of new conditions for the formation of capital.
The term "stagflation" dates back to 1965 in Great Britain, when the first stagflationary processes were recorded in the 1960s-70s. Prior to this, a cyclically developing economy was characterized by the fact that in the event of a decline in production and an economic depression, prices fell, i.e. deflation, or their growth was inhibited. Around the end of the 60s of the last century, the opposite picture began to emerge, which in the economy began to be called stagflation. It was especially pronounced in the United States, when, with a decline in production, the rate of inflationary price growth was 10%. The movement of the economy within the framework of cyclicality occurs between stagnation, which is characterized by falling prices, high unemployment, low level of economic growth and activity, and inflation, accompanied by opposite processes. Thus, to designate the processes characterized by high unemployment and rising prices in the absence of economic growth, it was decided to combine the two concepts of "stagnation" and "inflation" into one - stagflation. maintain a high level of prices during the crisis. Also, this process is influenced by anti-crisis measures taken by the state to manage demand and regulate price increases. However, even these reasons cannot explain the emergence of the phenomenon of stagflation in the period from the late 1960s to the early 1980s, which was global in nature and manifested itself in most developed Western countries. Presumably, this process was launched due to globalization in the economic sphere, characterized by the abolition of protectionism and the liberalization of foreign trade. This led to the end of the existence of isolated national economies in Western countries and shaped the global world economy. Perhaps globalization has caused a simultaneous rise in inflation and unemployment all over the place. Energy crises are also attributed to the causes of stagflation.