ABSTRACT OF PAPER
Title: The controversy on full recovery or stagnation in late 1930s and the immediate II Postwar: Some lessons for the economic stagnation analysis under/after the Great Recession
Author: De Leon Arias Adrian
In the recent debate about 'back to business as normal' under/after the Great Depression, the possibility of an extended scenario of low economic growth in the medium term has been related to the concept of secular stagnation; see for instance, Teulings and Baldwin (2014). While these analysis are only partially related to the concept of secular stagnation developed fundamentally by Hansen and other economists in late 1930´s, I will argue in this paper that the current study of secular stagnation can be improved by the review of the development of the concept mostly in Hansen (1938), and other economists in the late 1930´s, and in the immediate II Postwar, as developed by Harrod (1948) and Domar (1947 and 1948). The concept of secular stagnation, such as developed by Hansen (1939), is that there is a period of lagging economic growth due to structural condition such as slow growth in population, investment opportunities, and slack in technological innovation. They analyzed this situation from the XIX century to 1930s and they anticipated that the recession in 1937 led to the characterization of secular stagnation for the economies at least in the U.S.A. While the concept of secular stagnation was not developed in a operational way during the 1930´s and the economic expansion after the II Postwar “contradicted” its “predictions/Implications”, this concept was mostly discarded from the current economist´s tool box, although was revisited in different times until our days, see Rosenof (1997) In this paper, I argue that the review of the analysis of secular stagnation, could be done more operational if related to the concept of warranted growth in Harrod (1939, 1948) and the efficiency of capital in Domar (1947 and 1948) . These economists reviewed the subject of economic stagnation in the immediate II Postwar and suggested a more applied approach. In particular, they offered a “decomposition” of the determinants of secular stagnation in “over-saving” or “under-investment”. Although there are a remarkable history of the development of the concept of secular stagnation until mid 1990s in Rosenof (1997), in his analysis there is not a reference of the works of Harrod and Domar in this subject, therefore this paper will be contributing to a more complete history of development of the concept and it allows us to have a more operative and functional approach to the analysis of the persistent cases in economic history of secular stagnation.
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