Reversing

the

Decline:

A

Policy

Framework

for

Capital

Formation

and

Canadian

Stagflation

Resilience

What is stagflation? Stagflation can best be described as the condition of material, positive annual inflation combined with nominal per capita growth which is lower leading to negative real growth per capita. Rather than anchoring on the outlier of very high absolute inflation environments like the 1970s stagflation our view is that the two example environments below should be considered equally stagflationary:

Inflation 10% + nominal GDP per capita 8% = real GDP per capita -2%

Inflation 3% + nominal GDP per capita 1% = real GDP per capita -2%

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