secular stagnation

secular stagnation

a situation in which the economy remains trapped in the DEPRESSION phase of the BUSINESS CYCLE for long periods of time with low levels of AGGREGATE DEMAND in relation to productive capacity. This could result from a combination of factors, such as low levels of consumer spending (high savings), a high fixed-exchange rate that limits exports and leads to increased IMPORT PENETRATION, reduced investment in the economy reflecting business pessimism.

Typically, governments will seek to counteract a tendency towards secular stagnation by expansionary DEMAND-MANAGEMENT policies involving, for example, tax cuts, increased government spending and reduced interest rates to stimulate consumption and investment and, perhaps, a DEVALUATION of the exchange rate to increase demand for exports and to check imports. See EQUILIBRIUM LEVEL OF NATIONAL INCOME.

References in periodicals archive ?
Why this evidence is so significant becomes clear when we recognize that the main risks to the global economy are now completely different from the "New Normal" of secular stagnation, "low-flation," recession, and European instability that markets have spent the past decade worrying about.
That is why I sought to resurrect the secular stagnation theory - the idea that the economy, except at moments of financial excess, was likely to suffer from an excess of saving over investment and be prone to sluggishness and insufficient inflation.
Instead of falling back into recession or secular stagnation, the US economy continued growing and creating jobs as the stimulus was reduced and then stopped.
Keywords: productivity slowdown, secular stagnation, TFP growth
The problem of secular stagnation, which has tried to specify the adhered low growth of the global economy, has often led to the destabilization of jobs in the course of the restructuring.
Benigno and Fornaro (2015) also show an equilibrium representing a secular stagnation by combining a standard short-run Keynesian model with an endogenous growth model.
Although secular stagnation became a meme five years after the 2008 financial crisis, the term itself is much older.
The core countries have not been immune from their own difficulties, and have begun to experience secular stagnation as their economies have matured.
Given the political turmoil, the low probability of a fiscal package and other structural aspects (in relation with secular stagnation, savings glut), we believe that Treasury yields are capped and may even decline further.
Acknowledgement We thank John Fernald, seminar participants at the Boston Federal Reserve Bank, and participants at the Banque de France's 2017 conference on Secular Stagnation and Growth Measurement for helpful comments on earlier versions of the paper.
Economists and historians from the US and Europe outline the international monetary system and challenges that shaped it; historical antecedents of today's challenges in terms of secular stagnation and the asymmetric burden of adjustment; how the modern international monetary system has been shaped through international financial diplomacy; present-day currency wars and secular stagnation; and international policy coordination.
Post Crisis: Third-Generation Models of Secular Stagnation