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How secular is the current economic stagnation?

Author

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  • Maria Roubtsova

    () (Centre d'Economie de l'Université de Paris Nord (CEPN))

Abstract

From the burst of the dotcom bubble in 2000, until the global financial crisis that started in August 2007, the global economy was growing. During that phase, macroeconomics went through an era of general optimism around the idea of having reached a great moderation, with high steady growth and low stable inflation. Central bankers thought they managed to dampen the economic cycles. This era came to an end following the meltdown which started with the global financial crisis of 2007. And as among economic agents, macroeconomists’ general state of mind went from optimism to pessimism. Almost ten years since the beginning of the crisis, growth is not back to its pre-crisis trends. Therefore, macroeconomists are debating the notion of a secular stagnation. Is the economy on a long-term stagnation trend, if so, for what reasons, and how to address this situation? This paper offers a critical review of the debates among macroeconomists around this notion of secular stagnation, a concept which was invented by Alvin Hansen following the global economic crisis of the 1930s, and was brought back into the public debate largely by Lawrence Summers since the end of 2013. This literature review starts with a brief synthesis of the original debate about secular stagnation, launched by Hansen in 1938, and ended in the mid-1950s, since these debates inspired contemporary theorists. The second part highlights the main elements of neoclassical explanations for secular stagnation. The third part focuses on the Minskian idea of the end of a debt super-cycle. The last part offers a contemporary reading of the unleashing of the contradictions of capitalism, and the tendency of mature capitalism to generate oligopolies, as a cause for long stagnation.

Suggested Citation

  • Maria Roubtsova, 2016. "How secular is the current economic stagnation?," CEPN Working Papers 2016-09, Centre d'Economie de l'Université de Paris Nord.
  • Handle: RePEc:upn:wpaper:2016-09
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    File URL: https://cepn.univ-paris13.fr/download-attachment/9047/
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    Cited by:

    1. Florian Botte & Laurent Cordonnier & Thomas Dallery & Vincent Duwicquet & Jordan Melmies & Franck Van de Velde, 2017. "The cost of capital: between losses and diversion of wealth
      [Le coût du capital : entre pertes et détournement de richesses]
      ," Working Papers hal-01711157, HAL.

    More about this item

    Keywords

    macroeconomics; secular stagnation; balance sheet recession; financialization; private debt; growth and distribution;

    JEL classification:

    • E39 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Other
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • G01 - Financial Economics - - General - - - Financial Crises

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