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Secular stagnation – a theory that's taking economics by storm
- yummyfajitas 12y agoIt's important to note that secular stagnation, while being a recently popular theory, seems to require implausible assumptions. For example, the Egertsson/Mehrotra paper is one of the first papers to actually come up with a formal secular stagnation model. Unfortunately in order to make it work, the model requires both negative rates of return and high storage costs, both of which simply aren't correct. It remains to be seen whether one can actually construct a secular stagnation model that fits the world. http://marginalrevolution.com/marginalrevolution/2014/10/does-the-egertsson-and-mehrotra-model-of-secular-stagnation-work.html http://marginalrevolution.com/marginalrevolution/2014/10/doe... It's also worth noting that many of the same pop-economists who purport to believe in secular stagnation also tend to subscribe to Piketty-style theories. These people can be immediately dismissed as fools, since Piketty postulates a world with high rates of return and significant investment in productivity. Piketty is very much incompatible with secular stagnation.