TT - 02. Secular Stagnation

Question 1

Hansen (1939)

Answer 1

First put forward notion of “secular stagnation”

Question 2

Summers (2013)

Answer 2

Recent review of secular stagnation motivate by long lasting liquidity traps in Japan, US and Euro Area

Question 3

Benigno and Fornaro (2018)

Answer 3

Stagnation traps - liquidity traps driven by self fulfilling pessimistic expectations about future growth

Question 4

Eggertsson, Merhotra and Robins (2019)

Answer 4

Model of secular stagnation - liquidity traps outcome of fundamental secular factors, include several factors into an OLG model.

Insights:

• We may have entered a low interest rate era
• Liquidity traps will become more frequent
• Need for alternative policy tools, fiscal importance

Question 5

Rachel and Smith (2015)

Answer 5

Advanced economy downward trending real rates