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Delving into the Secular Stagnation Hypothesis: A Firm-Level Analysis of the Private Sector’s Excess Savings in Advanced Economies

Author

Listed:
  • Rodrigo Pérez Artica

    (Universidad Nacional del Sur (UNS)-CONICET)

  • Leandro Brufman

    (Universidad Nacional del Sur (UNS)-CONICET)

  • Lisana Belén Martinez

    (Universidad Nacional del Sur (UNS)-CONICET)

Abstract

We document a persistent increase in excess savings (defined as the difference between gross savings and capital formation) and a steady decline of gross capital formation in a sample of non-financial firms from developed countries. These patterns developed even before the financial breakdown of 2007 reinforcing the case for a secular stagnation hypothesis. They go along with a deleveraging process and a decrease in the share of operating assets in total assets. We discuss three possible explanations for this long-term behavior: financial constraints, operative volatility, and the weakening of business dynamism itself.

Suggested Citation

  • Rodrigo Pérez Artica & Leandro Brufman & Lisana Belén Martinez, 2017. "Delving into the Secular Stagnation Hypothesis: A Firm-Level Analysis of the Private Sector’s Excess Savings in Advanced Economies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 59(1), pages 77-106, March.
    • Handle: RePEc:pal:compes:v:59:y:2017:i:1:d:10.1057_s41294-016-0016-y
    DOI: 10.1057/s41294-016-0016-y
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    More about this item

    Keywords

    secular stagnation; investment; savings;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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