Review paper
A Model of Secular Stagnation: Theory and Quantitative Evaluation
Abstract
This paper formalizes and quantifies the secular stagnation hypothesis, defined as a persistently low or negative natural rate of interest leading to a chronically binding zero lower bound (ZLB). Output-inflation dynamics and policy prescriptions are fundamentally different from those in the standard New Keynesian framework. Using a 56-period quantitative life cycle model, a standard calibration to US data delivers a natural rate ranging from −...
Figures & Tables
Figure 2: Equilibrium in the asset market
Figure 3: Steady-state aggregate demand and aggregate supply curves
Figure 4: Adjustment mechanisms: wage flexibility and hysteresis
Figure 5: Data versus model transition paths: US, Japan, and the Eurozone
Figure 6: Monetary and fiscal policy responses
Figure 7: Secular stagnation equilibrium
Figure 8: Transition path of the natural rate of interest
Figure 9: Baby boom and bust
Paper Details
Title
A Model of Secular Stagnation: Theory and Quantitative Evaluation
Published Date
Jan 1, 2019
Volume
11
Issue
1
Pages
1 - 48
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