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Secular stagnation and progressive economic policy alternatives

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  • Onaran, Özlem

Abstract

This paper summarizes two main findings in the Post-Keynesian literature regarding the linkages between financialization, income distribution, accumulation and productivity. Firstly, at the core of secular stagnation lies the missing link between profits and investment. Secondly, rising inequality and financialization have been the main reasons for this missing link and hence the major brakes against capital accumulation and growth. The paper concludes with alternative progressive policies based on a coordinated policy mix of equality-led development and public investment.

Suggested Citation

  • Onaran, Özlem, 2016. "Secular stagnation and progressive economic policy alternatives," Greenwich Papers in Political Economy 15528, University of Greenwich, Greenwich Political Economy Research Centre.
    • Handle: RePEc:gpe:wpaper:15528
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    6. Onaran, Özlem & Stockhammer, Engelbert, 2016. "Progressive policies for wage-led growth in Europe," Greenwich Papers in Political Economy 15527, University of Greenwich, Greenwich Political Economy Research Centre.
    7. Onaran, Özlem & Guschanski, Alexander & Meadway, James & Martin, Alice, 2015. "Working for the economy: the economic case for trade unions [Policy Brief]," Greenwich Papers in Political Economy 14102, University of Greenwich, Greenwich Political Economy Research Centre.
    8. Sebastian Gechert, 2015. "What fiscal policy is most effective? A meta-regression analysis," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 553-580.
    9. Ozlem Onaran & Thomas Obst, 2016. "Wage-led growth in the EU15 member-states: the effects of income distribution on growth, investment, trade balance and inflation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(6), pages 1517-1551.
    10. Thomas Goda & Özlem Onaran & Engelbert Stockhammer, 2017. "Income Inequality and Wealth Concentration in the Recent Crisis," Development and Change, International Institute of Social Studies, vol. 48(1), pages 3-27, January.
    11. Onaran, Özlem, 2014. "The case for a coordinated policy mix of wage-led recovery and public investment in the G20," Greenwich Papers in Political Economy 15290, University of Greenwich, Greenwich Political Economy Research Centre.
    12. Engelbert Stockhammer & Eckhard Hein & Lucas Grafl, 2011. "Globalization and the effects of changes in functional income distribution on aggregate demand in Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(1), pages 1-23.
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    15. Rotta, Tomas N., 2015. "Productive stagnation and unproductive accumulation: an econometric analysis of the United States," Greenwich Papers in Political Economy 14060, University of Greenwich, Greenwich Political Economy Research Centre.
    16. Özlem Onaran, 2016. "Wage- versus profit-led growth in the context of international interactions and public spending: The political aspects of wage-led recovery," Working Papers PKWP1603, Post Keynesian Economics Society (PKES).
    17. Onaran, Özlem & Guschanski, Alexander & Meadway, James & Martin, Alice, 2015. "Working for the economy: the economic case for trade unions," Greenwich Papers in Political Economy 14083, University of Greenwich, Greenwich Political Economy Research Centre.
    18. Özlem Onaran & Valerie Boesch, 2014. "The Effect of Globalization on the Distribution of Taxes and Social Expenditures in Europe: Do Welfare State Regimes Matter?," Environment and Planning A, , vol. 46(2), pages 373-397, February.
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    21. Engelbert Stockhammer & Özlem Onaran & Stefan Ederer, 2009. "Functional income distribution and aggregate demand in the Euro area," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 33(1), pages 139-159, January.
    22. Özlem Onaran, 2016. "Wage- versus profit-led growth in the context of globalization and public spending: the political aspects of wage-led recovery," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 458-474, October.
    23. Blecker, Robert A, 1989. "International Competition, Income Distribution and Economic Growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(3), pages 395-412, September.
    24. Mr. Jonathan David Ostry & Mr. Andrew Berg & Mr. Charalambos G Tsangarides, 2014. "Redistribution, Inequality, and Growth," IMF Staff Discussion Notes 2014/002, International Monetary Fund.
    25. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(3), pages 479-511, May.
    26. Engelbert Stockhammer & Robert Stehrer, 2011. "Goodwin or Kalecki in Demand? Functional Income Distribution and Aggregate Demand in the Short Run," Review of Radical Political Economics, Union for Radical Political Economics, vol. 43(4), pages 506-522, December.
    27. Till Van Treeck, 2008. "Reconsidering The Investment–Profit Nexus In Finance‐Led Economies: An Ardl‐Based Approach," Metroeconomica, Wiley Blackwell, vol. 59(3), pages 371-404, July.
    28. Daniele Tori & Özlem Onaran, 2018. "The effects of financialization on investment: evidence from firm-level data for the UK," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(5), pages 1393-1416.
    29. C. Naastepad & Servaas Storm, 2006. "OECD demand regimes (1960-2000)," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(2), pages 211-246.
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    Cited by:

    1. Tori, Daniele & Onaran, Özlem, 2018. "Financialisation, financial development, and investment: evidence from European non-financial corporations," Greenwich Papers in Political Economy 22196, University of Greenwich, Greenwich Political Economy Research Centre.
    2. Wang, Lixia & Hao, Neng & Fang, Hui & Wu, Maoguo & Ma, Xinlei, 2023. "A model for measuring over-financialization: Evidence from Chinese companies," Finance Research Letters, Elsevier, vol. 51(C).
    3. Eckhard Hein & Franz Prante & Alessandro Bramucci, 2023. "Demand and growth regimes in finance-dominated capitalism and a progressive equality-, sustainability- and domestic demand-led alternative: A post-Keynesian simulation approach," PSL Quarterly Review, Economia civile, vol. 76(305), pages 181-202.
    4. Acocella, Nicola, 2021. "Stagnation," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(2), pages 121-140.
    5. Gilberto Tadeu Lima & Andre M. Marques, 2022. "Demand and Distribution in a Dynamic Spatial Panel Model for the United States: Evidence from State-Level Data," Working Papers, Department of Economics 2022_21, University of São Paulo (FEA-USP), revised 05 Oct 2022.

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    More about this item

    Keywords

    wage share; inequality; wage-led growth; financialization; secular stagnation; public investment;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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