Stagnation traps

We provide a Keynesian growth theory in which pessimistic expectations can lead to very persistent, or even permanent, slumps characterized by high unemployment and weak growth. We refer to these episodes as stagnation traps, because they consist in the joint occurrence of a liquidity and a growth t...

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Detalles Bibliográficos
Autores: Benigno, Gianluca, Fornaro, Luca
Tipo de recurso: artículo
Estado:Versión aceptada para publicación
Fecha de publicación:2018
País:España
Institución:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
Repositorio:Recercat. Dipósit de la Recerca de Catalunya
OAI Identifier:oai:recercat.cat:10230/37293
Acceso en línea:http://hdl.handle.net/10230/37293
http://dx.doi.org/10.1093/restud/rdx063
Access Level:acceso abierto
Palabra clave:Secular stagnation
Liquidity traps
Endogenous growth
Monetary policy
Multiple equilibria
Hysteresis
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spelling Stagnation trapsBenigno, GianlucaFornaro, LucaSecular stagnationLiquidity trapsEndogenous growthMonetary policyMultiple equilibriaHysteresisWe provide a Keynesian growth theory in which pessimistic expectations can lead to very persistent, or even permanent, slumps characterized by high unemployment and weak growth. We refer to these episodes as stagnation traps, because they consist in the joint occurrence of a liquidity and a growth trap. In a stagnation trap, the central bank is unable to restore full employment because weak growth depresses aggregate demand and pushes the policy rate against the zero lower bound, while growth is weak because low aggregate demand results in low profits, limiting firms’ investment in innovation. Aggressive policies aiming at restoring growth, such as subsidies to investment, can successfully lead the economy out of a stagnation trap by generating a regime shift in agents’ growth expectations.This research has been supported by the ESRC British Academy Mid-Career Fellowship grant ES/I024174/1, the Spanish Ministry of Science and Innovation (grant ECO2011-23192), the Fondation Banque de France Research Grant, the CERCA Programme/Generalitat de Catalunya and the Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (SEV-2015-0563).Oxford University Press201920192018info:eu-repo/semantics/articleinfo:eu-repo/semantics/acceptedVersionapplication/pdfapplication/pdfhttp://hdl.handle.net/10230/37293http://dx.doi.org/10.1093/restud/rdx063reponame:Recercat. Dipósit de la Recerca de Catalunyainstname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)InglésThe Review of Economic Studies. 2018 Jul;85(3):1425-70info:eu-repo/grantAgreement/ES/3PN/ECO2011-23192© Oxford University Press. This is a pre-copyedited, author-produced version of an article accepted for publication in The Review of Economic Studies following peer review. The version of record Benigno G, Fornaro L. Stagnation traps. The Review of Economic Studies. 2018 Jul;85(3):1425-70 is available online at: https://dx.doi.org/10.1093/restud/rdx072info:eu-repo/semantics/openAccessoai:recercat.cat:10230/372932026-05-29T05:05:01Z
dc.title.none.fl_str_mv Stagnation traps
title Stagnation traps
spellingShingle Stagnation traps
Benigno, Gianluca
Secular stagnation
Liquidity traps
Endogenous growth
Monetary policy
Multiple equilibria
Hysteresis
title_short Stagnation traps
title_full Stagnation traps
title_fullStr Stagnation traps
title_full_unstemmed Stagnation traps
title_sort Stagnation traps
dc.creator.none.fl_str_mv Benigno, Gianluca
Fornaro, Luca
author Benigno, Gianluca
author_facet Benigno, Gianluca
Fornaro, Luca
author_role author
author2 Fornaro, Luca
author2_role author
dc.subject.none.fl_str_mv Secular stagnation
Liquidity traps
Endogenous growth
Monetary policy
Multiple equilibria
Hysteresis
topic Secular stagnation
Liquidity traps
Endogenous growth
Monetary policy
Multiple equilibria
Hysteresis
description We provide a Keynesian growth theory in which pessimistic expectations can lead to very persistent, or even permanent, slumps characterized by high unemployment and weak growth. We refer to these episodes as stagnation traps, because they consist in the joint occurrence of a liquidity and a growth trap. In a stagnation trap, the central bank is unable to restore full employment because weak growth depresses aggregate demand and pushes the policy rate against the zero lower bound, while growth is weak because low aggregate demand results in low profits, limiting firms’ investment in innovation. Aggressive policies aiming at restoring growth, such as subsidies to investment, can successfully lead the economy out of a stagnation trap by generating a regime shift in agents’ growth expectations.
publishDate 2018
dc.date.none.fl_str_mv 2018
2019
2019
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/acceptedVersion
format article
status_str acceptedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/10230/37293
http://dx.doi.org/10.1093/restud/rdx063
url http://hdl.handle.net/10230/37293
http://dx.doi.org/10.1093/restud/rdx063
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv The Review of Economic Studies. 2018 Jul;85(3):1425-70
info:eu-repo/grantAgreement/ES/3PN/ECO2011-23192
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv Oxford University Press
publisher.none.fl_str_mv Oxford University Press
dc.source.none.fl_str_mv reponame:Recercat. Dipósit de la Recerca de Catalunya
instname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
instname_str Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
reponame_str Recercat. Dipósit de la Recerca de Catalunya
collection Recercat. Dipósit de la Recerca de Catalunya
repository.name.fl_str_mv
repository.mail.fl_str_mv
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