Title: Is economic growth really over? A contribution to the secular stagnation debate
Authors: Gerrit Meyerheim - LMU Munich (Germany) [presenting]
Peter Pedroni - Williams College (United States)
Uwe Sunde - LMU Munich (Germany)
Abstract: The observation of a slow-down in trend growth in almost all developed economies over the past decades has sparked a debate about the reasons for this secular stagnation. A prominent interpretation has been to associate the stagnation with a decline in productivity growth and an excessive accumulation of capital over the same period. Several potential factors have been held responsible for these empirical patterns, including demographic factors related to population aging, education, inequality, globalization, environmental factors, and public finances, but the discussion of the empirical relevance of these arguments remains largely descriptive. The relationship between income and productivity are investigated from the perspective of a long-run growth framework that implies non-linear long run dynamics as economies experience a transition from stagnation to sustained growth. We pair this framework with a novel empirical methodology to estimate the non-linear relationships between income, productivity and capital stipulated by the model and explore the empirical relevance of the different arguments that have been emphasized in the literature.