NATIONAL ACCOUNTS AS AN INSTRUMENT FOR THE ANALYSIS OF THE SOURCES OF STAGFLATION AN EXAMPLE: FRANCE AND GERMANY, 1971–79

Stagflation is a combination of an increasing rate of inflation with a decreasing rate of real growth. It appears when the inflationary gap of production costs raises faster than the inflationary gap of expenditures on Gross Domestic Marketable Product. The decomposition of these two gaps into their main elements gives then the possibility of determining the sources of the inflationary increase in costs and the causes of the relative retardation of the inflationary increase in expenditures. The main cause of stagflation in 1974 for France and Germany was the huge rise in oil prices which had not been immediately followed by an equal rise in prices of their exports. The inflationary rise in wages is an almost permanent factor of stagflation in France; in Germany its responsibility is involved only before 1975. In France the insufficient increase in the inflationary gap of expenditures was mainly due to the restrictive monetary policy and to the official price regulation. In Germany the restrictive monetary policy also contributed to the slowdown in demand in 1974 and 1975. In 1977, on the contrary, the main cause of stagflation was the slackening of export demands due to the world recession and the revaluation of the DM.