This book sets forth both a theory and a comparative empirical analysis of stagflation, that peculiar combination of high unemployment, slow growth, and spurts of high inflation bedeviling the advanced industrial nations during the past fifteen years.

The authors first construct a small macroeconomic model that takes full account of aggregate demand and supply forces in the determination of output, employment, and the price level, in both a single-economy and a multi-economy setting. They then apply the model to provide an understanding of comparative performance of...