Handbook of Economic Stagnation

Description

Handbook of Economic Stagnation takes a broad view, including contributions from orthodox and heterodox economists who examine situations in countries and worldwide regions, including Japan and the Euro area. To be sure, stagnation is periodically relieved by short economic bursts usually brought on by unsustainable asset price bubbles. Once the bubbles burst, stagnation returns. This book's fresh, comprehensive approach to the topic makes it the premier source for anyone affected by these cycles.

Synthesizes and organizes diverse perspectives about crisis economics and future economic growth
Emphasizes the relationships among stagnation, international economics, and the global distribution of labor
Includes Japan and the Euro zone as well as other countries and regions worldwide

Front Cover 2
HANDBOOK OF ECONOMIC STAGNATION 3
HANDBOOK OF ECONOMIC STAGNATION 5
Copyright 6
Contents 7
Contributors 13
Introduction: Handbook on economic stagnation 15
- Overview of the contributions to this volume 20
  - Part A: Secular stagnation: theory, causes, and evidence 21
    - Hein: Stagnation policy: a Steindlian perspective 21
    - Skott: Growth and stagnation in mature and dual economies 22
    - Storm: The secular stagnation of productivity growth 24
    - Kotz: Stagnation and social structures of accumulation 25
    - Hein: Financialization and stagnation—a macroeconomic regime perspective 26
    - Fazzari: Hyman Minsky meets secular stagnation 27

Front Cover 2
HANDBOOK OF ECONOMIC STAGNATION 3
HANDBOOK OF ECONOMIC STAGNATION 5
Copyright 6
Contents 7
Contributors 13
Introduction: Handbook on economic stagnation 15
- Overview of the contributions to this volume 20
  - Part A: Secular stagnation: theory, causes, and evidence 21
    - Hein: Stagnation policy: a Steindlian perspective 21
    - Skott: Growth and stagnation in mature and dual economies 22
    - Storm: The secular stagnation of productivity growth 24
    - Kotz: Stagnation and social structures of accumulation 25
    - Hein: Financialization and stagnation—a macroeconomic regime perspective 26
    - Fazzari: Hyman Minsky meets secular stagnation 27
    - Nikiforos: Demand, distribution, productivity, structural change, and (secular?) stagnation 28
    - Podkaminer: Economic stagnation in the Euro area 29
  - Part B: Secular stagnation in the Global South 30
    - Akyüz: Inequality, stagnation, financialization, and the Global South 30
    - Bresser-Pereira, Feijó, and Araújo: Does the liberal policy regime condemn Latin America to quasi-stagnation? 32
    - Blecker: Mexico: unequal integration and “stabilizing stagnation” 33
    - Huerta: The stagnation of the Mexican economy is here to stay 34
    - Ferrari-Filho: The Brazilian stagnation and an economic agenda to ensure macroeconomic stability and social development 35
  - Part C: The return of big government and economic prospects after the pandemic 36
    - Wray: The role of big government: an introduction 36
    - Dantas and Wray: Secular stagnation: as good as it gets? 37
    - Tymoigne: Secular stagnation and the age of ultra-low interest rates 38
    - Mattos: Monetary policy after the crisis—a Post-Keynesian critique 39
    - Nersisyan and Wray: Biden's build back better proposal and the future of secular stagnation 40
  - A - Secular stagnation: theory, causes, and evidence 43
    - One - Stagnation policy: a Steindlian perspective∗∗This contribution draws on Hein (2016, 2018), summarizing and fo ... 45
      - Introduction 45
      - A Steindlian model of distribution and growth 47
        
        The basic model 47
        
        Equilibrium growth with exogenous technological progress 51
        
        Equilibrium growth with endogenous technological progress 54
      - The channels of stagnation policy and implications for its reversal 57
      - Conclusions 58
      - References 59
    - Two - Growth and stagnation in mature and dual economies 63
      - Introduction 63
      - Mature economies, functional finance, and secular stagnation 65
      - Dual economies and structural transformation 70
      - Two cases: Japan and Brazil 74
      - References 78
    - Three - The secular stagnation of productivity growth 79
      - The ‘slow-moving turtle’ 79
      - Potential output growth and productivity growth 81
      - Total-factor-productivity (TFP) growth: solow variations 84
      - Bringing demand in from the cold 89
      - Wage growth as a determinant of productivity growth 94
      - Conclusion: weak demand growth pulls down potential output growth 96
      - Acknowledgments 98
      - References 98
    - Four - Stagnation and social structures of accumulation 101
      - Introduction11This chapter is a revised and updated version of Kotz and Basu (2019). Baris Guven provided research assistan ... 101
      - Social structure of accumulation theory and stagnation 103
      - History of SSAs in the United States 106
      - The neoliberal SSA and stagnation in the U.S. 110
      - Data analysis 113
      - Concluding comments 117
      - References 118
      - Further reading 119
    - Five - Financialization and stagnation—a macroeconomic regime perspective∗∗This contribution draws on Hein (2018a, ... 121
      - Introduction 121
      - The concept of macroeconomic regimes under financialization 122
      - The regimes before the crisis 126
      - Changes in the regimes in the course of and after the crisis 131
      - Challenges: imbalances, instability, and stagnation 134
      - Conclusions 139
      - References 140
    - Six - Hyman Minsky meets secular stagnation∗ 145
      - The microfoundations of Minsky's theory of investment 146
        
        A simple model of investment 147
        
        Integrating finance: borrowers' and lenders' risk 149
        
        What determines investment? 151
        
        From microeconomic investment to macroeconomic instability 155
        
        Distinguishing firm-level financial constraints from “loanable funds” theory 156
        
        Dynamics of financial instability: validation and fragility 157
        
        Brief digression on uncertainty 160
        
        Seeds of a Minsky crisis in the household sector 161
        
        Household finance and spending: 1980 through the Great Recession 162
        
        Dynamics of validation and fragility in the household sector 164
        
        Weak recovery, rising inequality, and secular stagnation 169
        
        Conclusion 174
        
        References 176
      - Seven - Demand, distribution, productivity, structural change, and (secular?) stagnation 179
        
        Introduction 179
        
        Neoclassical explanations of secular stagnation 182
        
        Demand effects 184
        
        Income distribution 189
        
        Endogenous technical change 192
        
        Monopoly capital and financialization 194
        
        Instead of conclusion: stagnation, is it secular? 196
        
        References 198
      - Eight - Economic stagnation in the Euro Area 201
        
        Preface 201
        
        Secular growth slowdown in the Euro Area: evidence 202
        
        A short digression: the slowdown of private consumption growth is linked to the slowdown of growth of fixed capital formation 205
        
        Falling wage shares: not quite a “natural development” 205
        
        A somewhat longer digression: supply side developments unlikely to have underlain stagnating output growth 209
        
        The noxious of restrictive EU fiscal policy rules and the common monetary policy 211
        
        Real effective exchange rate of Germany's EA partners: from relative appreciation to relative depreciation 214
        
        The limits of “internal devaluation” 216
        
        Suppression of fiscal deficits critically contributing to stagnant EA output growth 219
        
        The future remains uncertain 221
        
        References 222
      - B - Secular stagnation in the global south 223
        
        Nine - Inequality, stagnation, financialization, and the Global South 225
        
        Introduction 225
        
        Inequality, stagnation, and financialization 226
        
        Spillovers to the Global South 230
        
        External vulnerabilities of EMEs 233
        
        Resource transfers 235
        
        Net investment income positions 235
        
        Wealth transfers 237
        
        Conclusions 239
        
        References 239
        
        Ten - Does the liberal policy regime condemn Latin America to quasi-stagnation? 243
        
        Introduction 243
        
        First, nonconsolidated industrial development 246
        
        Second, growth with foreign savings 249
        
        Third, anchor to control inflation 251
        
        Fourth, high level interest rate 252
        
        Fifth, neutralization of the Dutch disease 253
        
        Sixth, capital controls 255
        
        Seventh, industrial policy 258
        
        Eighth, public savings 260
        
        Conclusion 262
        
        References 263
        
        Eleven - Mexico: unequal integration and “stabilizing stagnation” 267
        
        Introduction 267
        
        Dedication 267
        
        The growth slowdown in Mexico 268
        
        Alternative explanations for Mexico's slow growth 271
        
        The conventional wisdom: supply side causes 272
        
        The main explanation: focusing on the demand side 278
        
        Fiscal, monetary, and exchange rate policies 278
        
        The external constraint 282
        
        Inequality and the falling labor share 285
        
        Conclusions 287
        
        Acknowledgement 288
        
        References 289
        
        Twelve - The stagnation of the Mexican economy is here to stay∗∗The present article is part of the Research Project ... 293
        
        Stability of the exchange rate does not allow for flexibility of economic policies to foster growth 293
        
        Macroeconomic policies for maintaining “stability” are detrimental to endogenous conditions for growth 293
        
        The government's policy for stabilizing the exchange rate, and for lowering inflation, the fiscal deficit, and the amount o ... 295
        
        The fiscal and taxation policy 299
        
        The government will not succeed in reducing the amount of debt by reducing public spending 300
        
        Trade agreements have not been favorable toward economic growth 301
        
        Income inequality is harmful to economic growth 303
        
        Public investment is falling, and there is insufficient internal and external demand for growth 304
        
        There is no countercyclical fiscal policy 306
        
        Lower economic growth potential is detrimental to job creation, salaries, and the public wellbeing 307
        
        Deceleration of the world economy 307
        
        The Mexican economy has neither productive conditions, nor the economic-policy management needed to deal with external shocks 308
        
        The fragility of the economy when it depends upon capital inflows 308
        
        The impossibility of continuing with the predominating neoliberal policy 310
        
        Mexico needs a fiscal deficit that favors the productive sector to adjust the external deficit and drive the dynamics of th ... 311
        
        The need to operate with a flexible exchange rate 311
        
        References 313
        
        Thirteen - The Brazilian economic recession and stagnation and an Agenda to ensure macroeconomic stability and soci ... 315
        
        Introduction 315
        
        Chronicle of a crisis foretold 316
        
        An Agenda for the Brazilian economy 321
        
        Conclusion 325
        
        References 326
        
        C - The return of big government and economic prospects after the pandemic 327
        
        Fourteen - The role of big government: an introduction∗∗This chapter draws on Levy Economics Institute Working Pape ... 329
        
        The Domar problem and secular stagnation since 1910! 334
        
        Conclusion 337
        
        References 338
        
        Further reading 339
        
        Fifteen - Secular stagnation: as good as it gets? 341
        
        Introduction 341
        
        Secular stagnation and labor productivity growth 345
        
        Growth decomposition: productivity as a residual 347
        
        The role played by stagnation of wages 350
        
        Labor markets—the demand side 351
        
        Evidence from the experience of prime age workers 354
        
        The way forward 358
        
        References 361
        
        Further reading 362
        
        Sixteen - Secular stagnation and the age of ultra-low interest rates 363
        
        Interest rates over the past century 364
        
        Secular stagnation and interest rates 370
        
        Implications 374
        
        References 380
        
        Seventeen - Monetary policy after the subprime crisis: a Post-Keynesian critique 383
        
        Introduction 383
        
        Unconventional monetary policy after the crisis 384
        
        Mainstream theory reconsideration of monetary policy after the GFC 388
        
        A Post-Keynesian alternative on the role of the Central Bank 392
        
        Concluding remarks 399
        
        References 400
        
        Eighteen - Biden's build back better proposal and the future of secular stagnation∗∗A version of this paper was fir ... 403
        
        Introduction 403
        
        Building back better: the plan(s) 405
        
        Should we raise taxes to pay for spending? An alternative view of taxation 407
        
        Will the spending be inflationary if not paid for? 413
        
        Scattered rise in prices, but no true inflation 413
        
        Infrastructure spending “pays for itself” 415
        
        Conclusion 419
        
        References 420
        
        Index 423
        
        C 423
        
        A 423
        
        B 423
        
        E 424
        
        D 424
        
        F 425
        
        H 426
        
        K 426
        
        I 426
        
        L 426
        
        G 426
        
        J 426
        
        M 427
        
        P 429
        
        N 429
        
        O 429
        
        S 430
        
        Q 430
        
        R 430
        
        U 432
        
        V 432
        
        T 432
        
        W 432
        
        Back Cover 433

Author's affiliation

Randall Wray: Levy Economics Institute of Bard College, USA

Description

TOC

Reviews (0)

Author's affiliation