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Title:Stagflation in the world economy: A revival? PDF Logo
Authors:Berthold, Norbert
Gründler, Klaus
Issue Date:2012
Series/Report no.:Wirtschaftswissenschaftliche Beiträge des Lehrstuhls für Volkswirtschaftslehre, Wirtschaftsordnung und Sozialpolitik, Universität Würzburg 117
Abstract:Stagflation has decayed the world economy during the 1970s and the early 1980s. Recent empirical studies suggest that particularly the oil crises of 1973 and 1979 led to these high stagflationary periods. However, there are still some questions unanswered: is stagflation still a problem in the world economy? What factors other than the oil price cause stagflation? What affects the extent of stagflation? Did the determinants of stagflation change over time? Are there differences between the economies? We aim to answer these questions applying logit, count data and fixed effects PLS estimations using panel data of 13 countries between 1970 and 2010. First, we provide measures to specify the appearance as well as the magnitude of stagflation. Using these measures, we find that the economies show different vulnerabilities to stagflation. Moreover, the quantity of stagflation in the world economy appears to vary over time, although stagflationary periods occur regularly between 1970 and 2010. As we will show, stagflation is still a threat in present, albeit the probability of its occurence decreases over time. Contrariwise, the magnitude ascends, if stagflation emerges. Our findings indicate that stagflation is caused by the interplay of varoius factors and that the historically significant in fluence of oil price hikes has become virtually irrelevant during the 2000s. Interestingly, we found evidence that this impact has risen again at the rear edge of the sample. Nonetheless, stagflation nowadays is mainly triggered by growing interest rates and declining labor productivities.
Subjects:Stagflation
JEL:E3
O4
Document Type:Working Paper
Appears in Collections:Wirtschaftswissenschaftliche Beiträge, Lst. f. VWL, insb. Wirtschaftsordnung u. Sozialpolitik, Universität Würzburg

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