Monetary policy implications of transitory vs. permanently subdued growth prospects ("secular stagnation") : monetary dialogue November 2018

Since the start of the global financial crisis, per-capita income growth has stagnated in many advanced economies. Some scholars have interpreted the lack of growth as a temporary phenomenon caused by the legacy of the crisis. Others view the lower long-term growth as a consequence of an unfavourable evolution of the productive inputs (labour and capital) as well as of productivity. Against this background, the current paper examines the long-run evolution of the euro area economy, and suggests some causes for this low-growth phenomenon. This document was provided by Policy Department A at the request of the Committee on Economic and Monetary Affairs.