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Consumer Motivation in Developed Economies With Secular Stagnation.

ABSTRACT: In recent years, the slow pace of economic growth, high indebtedness, and high unemployment registered in most developed economies since 2009 have revived the debate over the "secular stagnation hypothesis" first formulated by the Keynesian economist Alvin Hansen in 1938. This return of the secular stagnation hypothesis occurred in November 2013, when Lawrence Summers postulated that the global economy was facing a scenario of low growth, low inflation, and a reduction in GDP per capita due to a chronic insufficiency of aggregate demand. The causes should be sought not only in cyclical factors associated with a long financial cycle and excessive accumulated public and private debt, but also in structural changes in the central economies in recent decades, linked to the rapid slowdown in population growth and the gradual aging of the population. Finally, other factors also depress demand, such as the progressive exhaustion of the globalization process and the consolidation of new labor models. In light of these developments, this paper's aim is twofold: first, to perform an econometric panel-data study in order to determine the influence of each of these factors in explaining secular stagnation in recent years for the selected sample of countries; and, second, to lay out proposals for reorienting the government intervention strategies adopted since the onset of the financial crisis to promote consumption and achieve sustained growth, job creation, and poverty reduction.

SUBMITTER: Callejas-Albinana FE

PROVIDER: S-EPMC6900960 | biostudies-literature |

REPOSITORIES: biostudies-literature

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Project description:Maintaining a stable exchange rate is a challenging task for the world, especially for developing economies. This study examines the impact of asymmetric exchange rates on trade flows in selected Asian countries and finds that the effects of increased exchange rate volatility on exports and imports differ among Pakistan, Malaysia, Japan, and Korea. The quarterly data from the period 1980 to 2018 is collected from the International Financial Statistics (IFS) database maintained by the International Monetary Fund (IMF). We employ both linear and non-linear Autoregressive Distributed Lag (ARDL) models for estimation. The non-linear models yielded more significant findings, while the linear models did not indicate any significant effects of exchange rate volatility on trade flows. The results of the study suggest that in the case of Pakistan, both the linear and non-linear models indicate that increased exchange rate volatility adversely affects exports and imports, while decreased volatility enhances both. This implies that stabilizing the exchange rate would be beneficial for Pakistan's trade. In contrast, the linear model applied to Malaysia shows no long-run effects of exchange rate volatility on exports. However, the result suggests that decreased volatility stimulates Malaysia's exports. Therefore, in the case of Malaysia, stabilizing the exchange rate could contribute to boosting exports. We also found that increased exchange rate volatility boosts exports of Japan. On the other hand, decreased volatility hurts exports of Japan. As for the long-run effects of exchange rate volatility on imports, we found that increased volatility boosts imports of Korea. The study provides various policy implications regarding the impact of exchange rate volatility on trade flows in developing economies. The study highlights the importance of country-specific considerations in understanding the impact of exchange rate volatility on trade flows, and has important policy implications for promoting trade and economic growth in these nations. It emphasizes the need to model exchange rate volatility separately for developed and developing countries and to continue research and analysis to identify ways to mitigate its negative effects on the economy.

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Consumer Motivation in Developed Economies With Secular Stagnation.

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