Does the world face secular stagnation?

Some public debate has been concerned about declining growth and secular stagnation with negative consequences for jobs and earnings.

A new discussion paper takes a global, long-run perspective on the recent debate about secular stagnation, which has so far mainly focused on the short term:

Matteo Cervellati (University of Bologna), Uwe Sunde (University of Munich) & Klaus F. Zimmermann (Princeton University and UNU-MERIT)

Demographic Dynamics and Long-Run Development: Insights for the Secular Stagnation Debate

Working Paper #604, Princeton University, Industrial Relations Section  UNU – MERIT Working Paper # 2016-049                                                                   ZEF Discussion Papers on Development Policy #226

The analysis is motivated by observing the interplay between the economic and demographic transition that has occurred in the developed world over the past 150 years. To the extent that high growth rates in the past have partly been the consequence of singular changes during the economic and demographic transition, growth is likely to become more moderate once the transition is completed.

At the same time, a similar transition is on its way in most developing countries, with profound consequences for the development prospects in these countries, but also for global comparative development.

The evidence presented in the paper suggests that long-run development dynamics have potentially important implications for the prospects of human and physical capital accumulation, the evolution of productivity and the question of secular stagnation.



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