Edited by Louis-Philippe Rochon and Hassan Bougrine
Chapter 14: Secular stagnation and the curse of contemporary Eldorados: whatever happened to broad-impact products?
The goal of this article is to offer an explanation, complementary to those that already exist, that might lend credibility to the secular stagnation viewpoint. This explanation, or this hypothesis, at the very conjectural stage at which we will be able to formulate it here, is not entirely new. It is based on the idea that what is lacking today in the inducement to invest is any stimulus arising from the existence of broad-impact goods capable o coordinating in a structured way a production norm and a consumption norm that would support a virtuous macroeconomic loop. Drawing on analyses by the French school of regulation, this interpretation combines supply and demand factors to account for the chronic shortfall in effective demand and, consequently, the mediocre performance in terms of growth of the developed economies for several decades now. Thanks to (if one can put it that way) the economic and financial crisis of the past ten years, a number of highly mainstream economists have looked into the reasons why the global economy, and more particularly the OECD countries, with the USA at the top, have to this point not recovered their previous momentum. Observing the persistent gap between actual and potential growth since 2008, they have come to recognize that this persistent output gap does not fit well with their canonical explanatory model. That model posits that the economic fluctuations generated by an economic shock (such as the one set off by the subprime crisis) will average around a trend-line (set by the potential growth rate) and fade over time until they match that line. This disagreement between facts and theory would seem to cast deep doubt on the doctrine and invite its supporters to open the range of assumptions and explanations deemed plausible in accounting for the mediocrity of economic growth over many long years.
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