Ways to Resolve Stagflation

The cover story published in the previous issue has correctly caught the prevailing question in every investor’s mind focusing on whether to allocate funds to the equity asset class in such a volatile environment. As is defined, stagflation implies a situation of inflation plus stagnant growth. Can you brief me on whether stagflation can be resolved?
- Anant K

Editor Responds: Thank you for the kind words. Stagflation is characterised by slow economic growth and high unemployment. As per economists, if productivity improves up to a point where there is higher growth but no additional inflation, the issue of stagflation can be resolved gradually. Also, another cure for stagflation can be to increase aggregate supply through supply-side policies. We hope we are able to answer your query. Keep writing to us