Is Secular Stagnation the Future for Europe?

There are at least two distinct (but related) concepts of ‘secular stagnation’. One concerns a possible long-run term trend growth failure and the other a permanent liquidity trap. In the context of poor productivity performance, both are legitimate fears for European economies although technological pessimism is misguided and scope for catch-up is still considerable. In each respect, however, policy responses that have worked in the past are available to address the problem. If European economies were to submit to either type of secular stagnation, it would be a result of policy failure rather than because it is inevitable.