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Globalization, Secular Stagnation and Soft National Balances: A Pro-Equilibrium Manifesto

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  • Leon Podkaminer

    (Vienna Institute for International Economic Studies, Austria)

Abstract

It is argued that increased freedom to run economic activities combined with the growing impotence of national governments (i.e., globalization) have contributed to the secular growth slowdown at the global level. Fast globalisation-driven growth of international trade has unleashed the global race for economic surpluses. The process involves the suppression of wages and widening income inequalities – restricting aggregate demand globally. A “beggar-thy-neighbor” tactics of keeping large trade surpluses by countries successfully suppressing wages and domestic demand is likely to be unproductive. Overcoming the secular stagnation may not be possible without safeguarding equilibrium (or balance) in international transactions between major industrial countries – even if this may necessitate that in most (or all) of them the public sectors run large fiscal deficits permanently.

Suggested Citation

  • Leon Podkaminer, 2018. "Globalization, Secular Stagnation and Soft National Balances: A Pro-Equilibrium Manifesto," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 68(supplemen), pages 141-152, January.
    • Handle: RePEc:aka:aoecon:v:68:y:2018:i:supplement1:p:141-152
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    File URL: http://www.akademiai.com/doi/pdf/10.1556/032.2018.68.S.11
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    More about this item

    Keywords

    economic growth; globalization; race to the bottom; imbalanced trade; fiscal deficits;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F15 - International Economics - - Trade - - - Economic Integration
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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