VoxEU Column Macroeconomic policy

A new Vox Debate on Secular Stagnation

To many observers, the long-lasting, underwhelming performance of growth, employment and investment suggests that something fundamental has changed with the way advanced economies’ macroeconomies are working. One leading explanation – the notion of ‘Secular Stagnation’ – has gained traction among some economists and policymakers while being rejected by others. This column opens a Vox Debate on Secular Stagnations which will involve frequent, invited ‘Lead Commentaries’ on all issues surrounding concept and its implications for policy, analysis and research. 

This column is a lead commentary in the VoxEU Debate "Secular Stagnation"

With last week’s decision to start buying Eurozone bonds for €60bn a month, the ECB entered a new phase in its struggle to revive the European economy. More than six years after the demise of Lehman Brothers and more than five years after Greece’s announcement that its official numbers greatly understated the actual magnitude of its public deficits, the economy is still in bad shape.

  • One can debate whether the stagnation is secular or not, but short-lived it is certainly not.

This explains why the eBook Secular Stagnation:  Facts, Causes, and Cures that Richard Baldwin and myself with contributions of many of the leading macroeconomists in the world drew so much attention. In a week's time, the book was downloaded more the 65,000 times. It was discussed by The Economist (2014), in The New York Times, by Bloomberg, by FT’s Alphaville, and by several leading bloggers. Some agreed, applauded the initiative, and thought the timing of the publication was spot on. Others disagreed, some even quite vehemently, arguing that this was a self-invented debate.

The ECB’s latest step has not been undisputed. It is supported by some, but vehemently opposed by others – particularly in Germany. This shows that there is a market for a continuation of the debate on secular stagnation. The Debate is wide open, but some of the questions we hope will be covered include:

  • What are the merits of the concept, and what are its weaknesses?
  • Is quantitative easing a proper policy to stop the stagnation?
  • How much did it contribute to the recovery in the US and the UK?
  • Do we run the risk of bubbles, or are rising asset prices an indispensable mean for resolving the crisis?
  • Will monetary policy alone be able to solve the issue, or will policymakers have to revert to fiscal policy? If so, can that be done within the framework of the Fiscal Stability Pact, or should that pact be revised?
  • Or, for yet another view, are monetary and fiscal policy not the culprits of the stagnation, but can only structural reform lead Europe to recovery?
  • Do we need an increase of the inflation target? All these questions has been raised, and they all deserve an answer.

VoxEU wants to facilitate this debate by collecting contributions on the Debate Page (http://www.voxeu.org/debates). We encourage you to respond to these questions or to highlight other questions.

If you want to contribute to a column to this debate, please email me your submission at cnt23[at]cam[dot]ac[dot]uk.


Baldwin, R and C Teulings (eds.) (2014), Secular Stagnation: Facts, Causes and Cures, VoxEU.org, 15 August.

The Economist (2014), "Fad or Fact?", 16 August.

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