Secular Trends and Technological Progress

50 Pages Posted: 7 Jul 2017 Last revised: 23 Oct 2017

See all articles by Robin Döttling

Robin Döttling

Rotterdam School of Management, Erasmus University

Enrico C. Perotti

University of Amsterdam - Finance Group; Centre for Economic Policy Research (CEPR); Tinbergen Institute

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Date Written: June 30, 2017


Technological progress enhancing the productivity of intangible capital can account for several long term financial trends since 1980. Critically, creating intangibles requires the commitment of human capital rather than physical investment, so firms need less external finance. In general equilibrium, a falling credit demand can explain reduced tangible investment along with falling interest rates. Excess savings boost asset valuations and flow to other assets such as real estate. Rising house prices combined with increasing wage inequality increase mortgage credit demand, household leverage and default risk. While demographics, trade and capital flows may have a strong impact on savings glut and factor productivity, only a major productivity shift to intangibles can account for all major trends, including rising income inequality.

Keywords: Intangible capital, skill-biased technological change, mortgage credit, human capital, excess savings, house prices

JEL Classification: D33, E22, G32, J24

Suggested Citation

Döttling, Robin and Perotti, Enrico C., Secular Trends and Technological Progress (June 30, 2017). Available at SSRN: or

Robin Döttling

Rotterdam School of Management, Erasmus University ( email )

P.O. Box 1738
Room T08-46
3000 DR Rotterdam, 3000 DR

Enrico C. Perotti (Contact Author)

University of Amsterdam - Finance Group ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
+31 20 525 4159 (Phone)
+31 20 525 5285 (Fax)


Centre for Economic Policy Research (CEPR)

United Kingdom

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS

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