Demand Side Secular Stagnation
American Economic Review
vol. 105,
no. 5, May 2015
(pp. 60-65)
Abstract
The experience of first Japan and now Europe and the USA suggests that Hansen's concept of secular stagnation is highly relevant. Recovery has been anemic and follows a generation of financially unsustainable and often lackluster growth. Investment demand has declined while the supply of saving has increased, leaving the economy vulnerable to liquidity traps. Although some US indicators have improved, forward real rates have declined sharply, European prospects remain muddled, and the zero-bound will likely constrain again during the next recession. Infrastructure and private investment are the best ways to both minimize the risk of secular stagnation and raise demand.Citation
Summers, Lawrence H. 2015. "Demand Side Secular Stagnation." American Economic Review, 105 (5): 60-65. DOI: 10.1257/aer.p20151103Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E31 Price Level; Inflation; Deflation
- E32 Business Fluctuations; Cycles
- H62 National Deficit; Surplus
- O47 Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence