Secular stagnation

Biagio Bossone

No 2014-47, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This study analyzes the emergence of secular stagnation as the consequence of a rise in the preference for liquidity. Such a rise is caused by a persistent set of pessimistic expectations. This study also investigates the effectiveness of a broad range of demand-management policies in dealing with secular stagnation. To obtain these results, this study uses a model where agents derive utility from holding assets of different degrees of liquidity. In this environment, rational expectations interact with changes in market sentiment, to produce secular stagnation.

Keywords: helicopter money; liquidity preference; market sentiment; quantitative easing; pessimistic (optimistic) expectations; utility analysis (search for similar items in EconPapers)
JEL-codes: E2 E3 E4 E5 E61 E62 E63 G11 G12 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201447

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