A Contagious Malady? Open Economy Dimensions of Secular Stagnation

Gauti Eggertsson, Neil R. Mehrotra, Sanjay R. Singh and Lawrence Summers

No 22299, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Conditions of secular stagnation - low interest rates, below target inflation, and sluggish output growth - characterize much of the global economy. We consider an overlapping generations, open economy model of secular stagnation, and examine the effect of capital flows on the transmission of stagnation. In a world with a low natural rate of interest, greater capital integration transmits recessions across countries as opposed to lower interest rates. In a global secular stagnation, expansionary fiscal policy carries positive spillovers implying gains from coordination, and fiscal policy is self-financing. Expansionary monetary policy, by contrast, is beggar-thy-neighbor with output gains in one country coming at the expense of the other. Similarly, we find that competitiveness policies including structural labor market reforms or neomercantilist trade policies are also beggar-thy-neighbor in a global secular stagnation.

JEL-codes: E31 E32 E52 F33 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-dge, nep-mac, nep-net and nep-opm
Note: EFG IFM ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (77)

Published as Gauti B. Eggertsson & Neil R. Mehrotra & Sanjay R. Singh & Lawrence H. Summers, 2016. "A Contagious Malady? Open Economy Dimensions of Secular Stagnation," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(4), pages 581-634, November.

Downloads: (external link)
http://www.nber.org/papers/w22299.pdf (application/pdf)

Related works:
Journal Article: A Contagious Malady? Open Economy Dimensions of Secular Stagnation (2016)
Working Paper: A Contagious Malady? Open Economy Dimensions of Secular Stagnation (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:22299

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w22299

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().