Secular stagnation or financial cycle drag?
Claudio Borio ()
Business Economics, 2017, vol. 52, issue 2, No 2, 87-98
Abstract This speech compares and contrasts two different interpretations of the current plight of the global economy. It argues that the world has been suffering not so much from a structural deficiency in aggregate demand—secular stagnation—but from the aftermath of financial booms gone wrong—financial cycle drag. This perspective suggests that the very low levels of interest rates that have prevailed are not necessarily equilibrium ones—consistent with the “natural rate”. And although it indicates that the headwinds from the financial bust, while very persistent, are temporary, it also points to a number of material risks ahead: further episodes of financial distress, a “debt trap” and, ultimately, a rupture in the open global economic order. To limit these risks, policies should be rebalanced towards structural measures and address more systematically the financial cycle.
Keywords: Secular stagnation; Financial cycle; Inflation (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1057/s11369-017-0035-3 Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pal:buseco:v:52:y:2017:i:2:d:10.1057_s11369-017-0035-3
Ordering information: This journal article can be ordered from
Access Statistics for this article
Business Economics is currently edited by Charles Steindel
More articles in Business Economics from Palgrave Macmillan, National Association for Business Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().