Question

What is the difference between structural stagnation hypothesis and secukar stagnation theory?

Answer 1

The main focus of structural stagnation hypothesis is the effect of free trade (globalization); and on contrary the secular stagnation main focus is the lack of investment opportunities. The structural stagnation hypothesis believes that open trade causes structural issues that primarily impacts the advanced economies, especially the United States and Europe, which will keep their economic growth below global economic growth into the foreseeable future as much of the development is usually done in developing nations. On the other hand, Secular stagnation theory states that advanced nations such as the United States would stop developing eventually because opportunities of investment would be reduced. When there is lack of new investment opportunities, the aggregate demand (component of investment) will wither, and along with the growth in economy