Secular Stagnation

The term “secular stagnation” was coined by Harvard economist Alvin Hansen in the 1930s. Secular stagnation refers to a situation of chronic underselling of a country’s goods and services. The underselling is reflected in the fact that too little is invested compared to the amount of savings. For savings represent foregone consumption. If the private sector’s savings are higher that its investment, then the sum of investment and private consumption is too small to cover overall economic output. Problems for the economy can only be avoided if the public sector or foreign investors can absorb the savings overhang; in other words if they can compensate for the demand deficit. There is a heated debate over whether the world or Europe is currently in a state of secular stagnation.

Basic Texts

Hans-Werner Sinn: Response to the Current Debate on Secular Stagnation, January 11th, 2014 (in German).

Debate on Public Debt, Discussion among German-speaking Economists via Email, Compilation by the Ifo Institute, November 2013 (in German).

Articles in refereed journals

"Austerity, Growth and Inflation: Remarks on the Eurozone’s Unresolved Competitiveness Problem", The World Economy 37 (1), 2014, pp. 1-13 (Download, 271 KB)CESifo Working Paper No. 4086, January 2013 (Download, 207 KB).

Smaller, non-refereed scientific monographs

The Laggard of Europe, CESifo Forum 4, 2003, special issue No. 1., 32 pages (translation of “Die rote Laterne …”) (Download, 4.4 MB).


Macroeconomics of Austerity, 2014 AEA Annual Meeting. European Crisis and Secular Stagnation, Discussion with Olivier Blanchard, Hans-Werner Sinn and Larry Summers, 04.01.2014, Presentation (PDF, 1.6 MB).



Ifo Viewpoints

Ifo Viewpoint No. 103: Forget Inflation, 10.03.2009.

Ifo Viewpoint No. 26: The Japanese Disease, 13.06.2001.