Real Sector Imbalances and the Great Recession

Mark Setterfield

No 1201, Working Papers from Trinity College, Department of Economics

Abstract: While much attention has been focused on the financial woes of the US economy in the wake of the Great Recession, this chapter focuses on an important real sector imbalance: the failure of real wages to keep pace with productivity growth over the past three decades. This imbalance is shown to create a structural flaw in the aggregate demand generating process that threatens to undermine future macroeconomic performance. The chapter reflects on the policy responses necessary to remedy this situation, and the likelihood that the US will succeed in avoiding a future of secular stagnation.

Keywords: Real wage growth; productivity growth; aggregate demand; household debt; Great Recession (search for similar items in EconPapers)
JEL-codes: E21 E24 E25 E61 E66 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2012-01
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (3)

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http://www3.trincoll.edu/repec/WorkingPapers2012/WP12-01.pdf First version, 2012 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tri:wpaper:1201

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