Growth, Secular Stagnation and Wealth Preference

28 Pages Posted: 1 Sep 2015

See all articles by Yoshiyasu Ono

Yoshiyasu Ono

Osaka University - Institute of Social and Economic Research (ISER)

Date Written: September 1, 2015

Abstract

In 1960s-1980s Japan enjoyed high economic growth. In the early 1990s, however, the growth rate drastically declined and thereafter Japan has been suffering secular stagnation. This paper proposes a dynamic macroeconomic model that can consistently explain such a drastic change in economic performance. Wealth preference plays an important role. In the early stage consumption grows at the same pace as productivity increases. Once consumption reaches a certain level, however, it deviates from the full-employment level and aggregate demand deficiency appears. After that the economic growth rate asymptotically approaches zero even if productivity keeps on increasing, and secular stagnation arises.

Keywords: Long-run stagnation, aggregate demand deficiency, wealth preference, fair wages, economic growth, deflationary gap, zero interest rates

JEL Classification: E32, E13

Suggested Citation

Ono, Yoshiyasu, Growth, Secular Stagnation and Wealth Preference (September 1, 2015). ISER Discussion Paper No. 946. Available at SSRN: https://ssrn.com/abstract=2654081

Yoshiyasu Ono (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

Register to save articles to
your library

Register

Paper statistics

Downloads
32
Abstract Views
328
PlumX Metrics