secular stagnation hypothesis
E950847
The secular stagnation hypothesis is an economic theory proposing that mature economies can experience prolonged periods of low growth, low interest rates, and underemployment due to chronic demand shortfalls and structural factors.
All labels observed (1)
| Label | Occurrences |
|---|---|
| secular stagnation hypothesis canonical | 2 |
Statements (59)
| Predicate | Object |
|---|---|
| instanceOf |
economic hypothesis
ⓘ
macroeconomic theory ⓘ |
| appliesPrimarilyTo | advanced economies ⓘ |
| associatedWith |
Alvin Hansen
NERFINISHED
ⓘ
Lawrence Summers NERFINISHED ⓘ |
| assumes | persistent gap between desired saving and desired investment at full employment ⓘ |
| attributedCause |
declining relative price of capital goods
ⓘ
deleveraging after financial crises ⓘ demographic slowdown ⓘ high desired saving relative to investment ⓘ lower capital intensity of new technologies ⓘ population aging ⓘ rising income inequality ⓘ slower labor force growth ⓘ weak aggregate demand ⓘ |
| contrastsWith | temporary cyclical stagnation ⓘ |
| coreIdea |
chronic demand shortfalls can depress output and employment
ⓘ
economies may operate below potential output for extended periods ⓘ mature economies can experience prolonged periods of low growth ⓘ monetary policy may be constrained by the zero lower bound ⓘ negative natural real interest rates may be required to restore full employment ⓘ persistent low real interest rates can coexist with weak investment ⓘ structural factors can reduce equilibrium real interest rates ⓘ |
| criticizedBy |
real business cycle theorists
ⓘ
some New Classical economists ⓘ |
| criticizedFor |
insufficient empirical support in some periods
ⓘ
underestimating role of supply-side factors ⓘ |
| explains |
persistent low real interest rates in advanced economies
ⓘ
persistent unemployment or underemployment ⓘ sluggish post-crisis recoveries ⓘ weak investment despite low borrowing costs ⓘ |
| field |
business cycle theory
ⓘ
economic growth theory ⓘ macroeconomics ⓘ |
| historicalContext |
Great Depression
NERFINISHED
ⓘ
Great Recession NERFINISHED ⓘ |
| influencedDebateOn |
appropriate level of real interest rates
ⓘ
post-crisis macroeconomic policy ⓘ |
| keyConcept |
chronic excess saving over investment
ⓘ
liquidity trap ⓘ natural rate of interest ⓘ output gap ⓘ underemployment equilibrium ⓘ zero lower bound ⓘ |
| originatedIn | 1930s ⓘ |
| policyImplication |
macroprudential policies to reduce financial instability
ⓘ
need for more expansionary fiscal policy ⓘ redistribution to raise consumption demand ⓘ structural reforms to raise investment and productivity ⓘ tolerance of higher inflation targets ⓘ use of large-scale public investment programs ⓘ |
| proposedBy | Alvin Hansen NERFINISHED ⓘ |
| publicationContext | American Economic Review NERFINISHED ⓘ |
| relatedConcept |
Keynesian economics
ⓘ
growth slowdown in advanced economies ⓘ hysteresis in unemployment ⓘ |
| revivedBy | Lawrence Summers NERFINISHED ⓘ |
| revivedIn | 2010s ⓘ |
| timeHorizon | long run ⓘ |
Referenced by (2)
Full triples — surface form annotated when it differs from this entity's canonical label.