Learning to believe in secular stagnation

Christopher Gibbs

Economics Letters, 2018, vol. 163, issue C, 50-54

Abstract: This paper shows that a secular stagnation equilibrium as proposed by Eggertsson and Mehrotra (2014) is E-stable. This is in contrast to the often studied liquidity trap equilibrium that exist in representative agent New Keynesian models at the zero lower bound when there is active monetary policy following a Taylor rule. This result reconciles the observed stable low growth and low inflation outcomes since the end of the Global Financial Crisis with the instability predicted by the New Keynesian model using a standard modeling framework.

Keywords: Secular stagnation; Expectations; Adaptive learning; Zero lower bound (search for similar items in EconPapers)
JEL-codes: D83 D84 E31 E32 E52 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Learning to Believe in Secular Stagnation (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:163:y:2018:i:c:p:50-54

DOI: 10.1016/j.econlet.2017.11.019

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