SECULAR STAGNATION, R&D, PUBLIC INVESTMENT, AND MONETARY POLICY: A GLOBAL-MODEL PERSPECTIVE

Pietro Cova, Alessandro Notarpietro, Patrizio Pagano () and Massimiliano Pisani

Macroeconomic Dynamics, 2021, vol. 25, issue 5, 1267-1287

Abstract: We evaluate the global macroeconomic effects of cross-country-coordinated fiscal and monetary policies to counterbalance secular stagnation by simulating a five-region New Keynesian model of the world economy, calibrated to the United States (US), the euro area, Japan, China, and the rest of the world. The model includes investment in research and development (R&D) as a key factor affecting global growth. Our main findings are as follows. First, unfavorable technology developments may have played a nontrivial role in the global growth slowdown. Second, secular stagnation can be more effectively counterbalanced by coordinating global fiscal and monetary measures encouraging R&D accumulation. Third, these coordinated measures provide a larger welfare gain relative to a unilateral fiscal expansion.

Date: 2021
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Working Paper: Secular stagnation, R&D, public investment and monetary policy: a global-model perspective (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:macdyn:v:25:y:2021:i:5:p:1267-1287_7

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