Hugh, E. (2014) “Does The Secular Stagnation Theory Have Any Sort of Validity?“, A Fistful of Euros: European Opinion Blog, 20 Οκτωβρίου.
In a number of blog-posts (Paul Krugman’s Bicycling Problem, On Bubble Business Bound, The Expectations Fairy) I have examined some of the implications of the theory of secular stagnation. But I haven’t up to now argued why I think the hypothesis that Japan and some parts of Europe are suffering from some kind of secular stagnation could well be a valid one.
Strangely, while I would suggest the most obviously affected countries are those mentioned above, most of the debate has centered around the US economy. Since it is not at all clear that the US economy is actually suffering from either a liquidity trap or secular stagnation at this point, this has lead many to question whether the idea might not be ill-founded. The Economist, for example, in a revue article (Fad or Fact) of Teulings and Baldwin’s Vox e-book on the topic conclude the concept “remains a baggy one”, one which is “arguably too capacious for its own good”.
Viewed in this light the concept does at times appear vague, and lacking in clear definition. In part this is because Alvin Hansen’s original idea was made up of two components, a technological and a demographic one. Naturally if there is a slowdown in the rate of impact of technological innovation then this would be felt equally across those economies which are operating near the technological frontier. But the phenomenon which is being described today as secular stagnation isn’t being witnessed equally across all those countries. Economies in both the UK and the US appear to have responded differently to those in Sweden, the Euro Area and Japan, a phenomenon which is obvious to the theory’s critics. Thus the Economist author goes on to argue, “it is hard to avoid the conclusion that many of the euro area’s difficulties result from a dysfunctional monetary union rather than a susceptibility to secular stagnation.” And it would be hard to disagree with the writer, except… except ….except that there is the awkward little case of Japan, which doesn’t actually use the Euro, as there are possible cases like the Czech Republic, Sweden or Hungary that don’t either.
Σχετικές αναρτήσεις:
- Monthly CFM Survey: Secular Stagnation, Centre for Macroeconomic Survey, 03 Οκτωβρίου 2014.
- Teulings, C. & Baldwin, R. (2014) “Secular stagnation: Facts, causes, and cures“, VoxEU Organisation Books, 15 Αυγούστου.
- Borio, C. & Disyatat, P. (2014) “Low interest rates and secular stagnation: Is debt a missing link?“, VoxEU Organisation, 25 Ιουνίου.