Delving into the Secular Stagnation Hypothesis: A Firm-Level Analysis of the Private Sector’s Excess Savings in Advanced Economies

Rodrigo Pérez Artica (), Leandro Brufman and Lisana Belén Martinez
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Rodrigo Pérez Artica: Universidad Nacional del Sur (UNS)-CONICET
Lisana Belén Martinez: Universidad Nacional del Sur (UNS)-CONICET

Comparative Economic Studies, 2017, vol. 59, issue 1, No 4, 77-106

Abstract: Abstract We document a persistent increase in excess savings (defined as the difference between gross savings and capital formation) and a steady decline of gross capital formation in a sample of non-financial firms from developed countries. These patterns developed even before the financial breakdown of 2007 reinforcing the case for a secular stagnation hypothesis. They go along with a deleveraging process and a decrease in the share of operating assets in total assets. We discuss three possible explanations for this long-term behavior: financial constraints, operative volatility, and the weakening of business dynamism itself.

Keywords: secular stagnation; investment; savings (search for similar items in EconPapers)
JEL-codes: E2 G3 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1057/s41294-016-0016-y

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