Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146974
Authors: 
Hein, Eckhard
Year of Publication: 
2015
Series/Report no.: 
Working Paper, Levy Economics Institute 846
Abstract: 
The current debate on secular stagnation is suffering from some vagueness and several shortcomings. The same is true for the economic policy implications. Therefore, we provide an alternative view on stagnation tendencies based on Josef Steindl's contributions. In particular, Steindl (1952) can be viewed as a pioneering work in the area of stagnation in modern capitalism. We hold that this work is not prone to the problems detected in the current debate on secular stagnation: It does not rely on the dubious notion of an equilibrium real interest rate as the equilibrating force of saving and investment at full employment levels, in principle, with the adjustment process currently blocked by the unfeasibility of a very low or even negative equilibrium rate. It is based on the notion that modern capitalist economies are facing aggregate demand constraints, and that saving adjusts to investment through income growth and changes in capacity utilization in the long run. It allows for potential growth to become endogenous to actual demand-driven growth. And it seriously considers the role of institutions and power relationships for long-run growth-and for stagnation.
Subjects: 
Secular Stagnation
Stagnation Policy
Distribution and Growth
Steindl
JEL: 
B22
E11
E12
E65
O11
Document Type: 
Working Paper

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