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Secular Stagnation, R&D, Public Investment, And Monetary Policy: A Global-Model Perspective

Author

Listed:
  • Cova, Pietro
  • Notarpietro, Alessandro
  • Pagano, Patrizio
  • Pisani, Massimiliano

Abstract

We evaluate the global macroeconomic effects of cross-country-coordinated fiscal and monetary policies to counterbalance secular stagnation by simulating a five-region New Keynesian model of the world economy, calibrated to the United States (US), the euro area, Japan, China, and the rest of the world. The model includes investment in research and development (R&D) as a key factor affecting global growth. Our main findings are as follows. First, unfavorable technology developments may have played a nontrivial role in the global growth slowdown. Second, secular stagnation can be more effectively counterbalanced by coordinating global fiscal and monetary measures encouraging R&D accumulation. Third, these coordinated measures provide a larger welfare gain relative to a unilateral fiscal expansion.

Suggested Citation

  • Cova, Pietro & Notarpietro, Alessandro & Pagano, Patrizio & Pisani, Massimiliano, 2021. "Secular Stagnation, R&D, Public Investment, And Monetary Policy: A Global-Model Perspective," Macroeconomic Dynamics, Cambridge University Press, vol. 25(5), pages 1267-1287, July.
    • Handle: RePEc:cup:macdyn:v:25:y:2021:i:5:p:1267-1287_7
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    Cited by:

    1. Thomas H. W. Ziesemer, 2023. "Semi-endogenous growth in a non-Walrasian DSEM for Brazil: estimation and simulation of changes in foreign income, human capital, R&D, and terms of trade," Economic Change and Restructuring, Springer, vol. 56(2), pages 1147-1183, April.
    2. Busetti, Fabio & Neri, Stefano & Notarpietro, Alessandro & Pisani, Massimiliano, 2021. "Monetary policy strategies in the New Normal: A model-based analysis for the euro area," Journal of Macroeconomics, Elsevier, vol. 70(C).
    3. Thomas H. W. Ziesemer, 2021. "Semi-endogenous growth models with domestic and foreign private and public R&D linked to VECMs," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 30(6), pages 621-642, August.
    4. Dariusz Cezary Kotlewski, 2023. "The soundness of returning to manufacturing through the lens of productivity accounting," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 3, pages 253-274.
    5. Concetta Rondinelli & Roberta Zizza, 2020. "Spend today or spend tomorrow? The role of inflation expectations in consumer behaviour," Temi di discussione (Economic working papers) 1276, Bank of Italy, Economic Research and International Relations Area.
    6. Olha Kravchenko, 2019. "Public-Private Partnership As A Mechanism For Financing Infrastructure Modernization," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 5(1).
    7. Hirschbühl, Dominik & Spitzer, Martin, 2021. "International medium-term business cycles," Working Paper Series 2536, European Central Bank.
    8. Nicola Acocella, 2021. "Stagnation," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(2), pages 121-140.
    9. Anna Bartocci & Alessandro Notarpietro & Massimiliano Pisani, 2022. "Covid-19 Shock and Fiscal-Monetary Policy Mix in a Monetary Union," Springer Proceedings in Business and Economics, in: Luigi Paganetto (ed.), Economic Challenges for Europe After the Pandemic, pages 233-266, Springer.
    10. Ziesemer, Thomas, 2020. "Semi-endogenous growth models with domestic and foreign private and public R&D linked to VECMs with evidence for five countries," MERIT Working Papers 2020-013, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Giuseppe Ferrero & Massimiliano Pisani & Martino Tasso, 2022. "Policy Mix During a Pandemic Crisis: A Review of the Debate on Monetary and Fiscal Responses and the Legacy for the Future," Springer Proceedings in Business and Economics, in: Luigi Paganetto (ed.), Economic Challenges for Europe After the Pandemic, pages 267-320, Springer.
    12. Lorenzo Burlon & Paolo D'Imperio, 2019. "The euro-area output gap through the lens of a DSGE model," Questioni di Economia e Finanza (Occasional Papers) 477, Bank of Italy, Economic Research and International Relations Area.
    13. Burlon, Lorenzo & D’Imperio, Paolo, 2020. "Reliable real-time estimates of the euro-area output gap," Journal of Macroeconomics, Elsevier, vol. 64(C).

    More about this item

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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