UK long-term yields are extraordinarily low. This could be interpreted as financial markets expecting prolonged low growth or low inflation, or both. This column argues that this view is overly gloomy. Factors pulling down today’s inflation are unlikely to be permanent, and the economic headwinds should ease gradually. Additionally, a return to productivity growth should facilitate faster potential output growth over the long term. A more likely interpretation is that low yields reflect precautionary actions by public and private financial-market participants to reduce vulnerabilities to adverse outcomes.
Minouche Shafik, Thursday, June 25, 2015 - 00:00
Willem Buiter, Ebrahim Rahbari, Joe Seydl, Friday, June 5, 2015 - 00:00
Stagnation is gripping several of the world’s largest economies and many view this as secular, not transient. This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure investment.
Roger Backhouse, Mauro Boianovsky, Tuesday, May 19, 2015 - 00:00
The notion of secular stagnation – a state of negligible or zero economic growth – is back in the headlines. Questions naturally arise about its intellectual antecedents. This column discusses how the concept rose and fell with the economic fortunes of advanced industrialised nations. Political trends and trends in economic theory played a part in its trajectory, with the notion closely connected to the idea that the level of government debt should be allowed to rise.
Robert E. Hall, Wednesday, April 22, 2015 - 00:00
The disappointing post-Crisis performance of the US economy and even more disappointing performance of continental Europe and Japan have revived interest in the possibility of secular stagnation. This column argues that a consensus is forming that inadequate demand will no longer be a factor in whatever US stagnation occurs in coming years. In Japan and Europe, on the other hand, the case for boosting demand is strong and inadequate demand is almost surely a main cause of the stagnation.
Kenneth Rogoff, Wednesday, April 22, 2015 - 00:00
Weak, post-Crisis growth has been blamed on secular stagnation. This column argues that the debt super-cycle view provides a more accurate and useful framework for understanding what has transpired and what is likely to come next. The difference matters. Unlike secular stagnation, a debt super-cycle is not forever. After deleveraging and borrowing headwinds subside, expected growth trends might prove higher than simple extrapolations of recent performance might suggest.
Juan Antolin-Diaz, Thomas Drechsel, Ivan Petrella, Tuesday, February 17, 2015 - 00:00
Evidence of a decline in long-run growth is accumulating. However, many important questions remain unanswered. The analysis in column employs recent econometric techniques to provide an answer to some of the pertinent questions. The findings indicate that the weakness of the current recovery in the G7 is associated with a decline in the long-run growth rate of labour productivity.
Simon Wren-Lewis, Friday, January 30, 2015 - 00:00
Paul De Grauwe, Friday, January 30, 2015 - 00:00
Axel Gottfries, Coen Teulings, Friday, January 30, 2015 - 00:00
Coen Teulings, Friday, January 30, 2015 - 00:00
Brian Pinto, Wednesday, December 17, 2014 - 00:00
Kristina Morkunaite, Felix Huefner, Thursday, November 27, 2014 - 00:00
Lawrence H. Summers, Thursday, October 30, 2014 - 00:00
The notion that Europe and other advanced economies are suffering secular stagnation is gaining traction. This column by Larry Summers – first published in the Vox eBook “Secular Stagnation: Facts, Causes and Cures” – explains the idea. It argues that a decline in the full-employment real interest rate coupled with low inflation could indefinitely prevent the attainment of full employment.
Mateusz Szczurek, Friday, September 5, 2014 - 00:00
Coen Teulings, Richard Baldwin, Wednesday, September 10, 2014 - 00:00
The CEPR Press eBook on secular stagnation has been viewed over 80,000 times since it was published on 15 August 2014. The PDF remains freely downloadable, but as the European debate on secular stagnation is moving into policy circles, we decided to also make it a Kindle book. This is available from Amazon; all proceeds will help defray VoxEU expenses.
Claudio Borio, Piti Disyatat, Wednesday, June 25, 2014 - 00:00
Real interest rates have fallen to historic lows, and some economists are concerned that an era of secular stagnation has begun. This column highlights the role of policy frameworks and financial factors – particularly debt – in linking low real interest rates and sluggish economic growth. Policies that do not lean against booms but ease aggressively and persistently in busts induce a downward bias in interest rates over time and an upward bias in debt levels – something akin to a debt trap. Low real interest rates may thus be self-reinforcing and not always ‘natural’.
Jan Willem van den End , Jakob de Haan, Friday, March 28, 2014 - 00:00
While many economists argue that demand stimulus is needed, this column argues that supply side measures are necessary to avoid secular stagnation. In the Eurozone, it is necessary to clean up and strengthen the balance sheets of banks, which can kick-start the flow of new lending. The comprehensive assessment by the ECB is an important step in this direction.