IDEAS home Printed from https://ideas.repec.org/p/ocp/rpaeco/pb-29-21.html
   My bibliography  Save this paper

U.S. Bubble-Led Macroeconomics

Author

Listed:
  • Otaviano Canuto

Abstract

Macroeconomic dynamics in the U.S. economy has increasingly become associated with asset price fluctuations in the past few decades. Financial conditions have increasingly become an influential factor shaping the cyclical pace of the macroeconomy. There has been a mismatch between rising financial wealth and the pace of creation and incorporation of new assets. Several secular stagnation hypotheses offer explanations for the insufficient creation of new assets. Public debt—and its partial monetization by central banks—has played a stabilizing role by boosting the net supply of assets available to accommodate the demand for financial assets. The U.S. big balance sheet economy has been on a growth path highly dependent on the continuity of low real interest rates, as well as stretched price-earnings ratios of stocks and high corporate debt. Periodic episodes of downward adjustment of asset prices have been countervailed with lax monetary policies.

Suggested Citation

  • Otaviano Canuto, 2021. "U.S. Bubble-Led Macroeconomics," Research papers & Policy papers on Economic Trends and Policies 2119, Policy Center for the New South.
    • Handle: RePEc:ocp:rpaeco:pb-29-21
    as

    Download full text from publisher

    File URL: https://www.policycenter.ma/sites/default/files/2021-10/PB-29-21-Canuto.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert J. Gordon, 2014. "The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections," NBER Working Papers 19895, National Bureau of Economic Research, Inc.
    2. Mr. Subir Lall & Mr. Li Zeng, 2020. "Intangible Investment and Low Inflation: A Framework and Some Evidence," IMF Working Papers 2020/190, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Otaviano Canuto, 2021. "U.S. Bubble-Led Macroeconomics," Policy briefs on Economic Trends and Policies 2119, Policy Center for the New South.
    2. Andrew Foerster & Andreas Hornstein & Pierre-Daniel Sarte & Mark W. Watson, 2019. "Aggregate Implications of Changing Sectoral Trends," NBER Working Papers 25867, National Bureau of Economic Research, Inc.
    3. Gabriele Fiorentini & Alessandro Galesi & Gabriel Pérez-Quirós & Enrique Sentana, 2018. "The rise and fall of the natural interest rate," Working Papers 1822, Banco de España.
    4. Czarnitzki, Dirk & Fernández, Gastón P. & Rammer, Christian, 2023. "Artificial intelligence and firm-level productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 188-205.
    5. Mengheng Li & Ivan Mendieta‐Muñoz, 2020. "Are long‐run output growth rates falling?," Metroeconomica, Wiley Blackwell, vol. 71(1), pages 204-234, February.
    6. Neri, Stefano & Gerali, Andrea, 2019. "Natural rates across the Atlantic," Journal of Macroeconomics, Elsevier, vol. 62(C).
    7. Komlos John, 2016. "Has Creative Destruction become more Destructive?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(4), pages 1-12, October.
    8. Madeira, Carlos, 2021. "The long term impact of Chilean policy reforms on savings and pensions," The Journal of the Economics of Ageing, Elsevier, vol. 19(C).
    9. Kushlin, Valery Ivanovich (Кушлин, Валерий Иванович) & Ustenko, V.S. (Устенко, В.С.), 2016. "Analysis of International Experience of Intensification of Scientific and Innovative Activity in the Modern Unstable Conditions [Анализ Международного Опыта Активизации Научно-Инновационной Деятель," Working Papers 2832, Russian Presidential Academy of National Economy and Public Administration.
    10. José De Gregorio, 2018. "Productivity in Emerging Market Economies: Slowdown or Stagnation?," Working Papers wp471, University of Chile, Department of Economics.
    11. John G. Fernald, 2015. "Productivity and Potential Output before, during, and after the Great Recession," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 1-51.
    12. Julian Kozlowski & Laura Veldkamp & Venky Venkateswaran, 2019. "The Tail That Keeps the Riskless Rate Low," NBER Macroeconomics Annual, University of Chicago Press, vol. 33(1), pages 253-283.
    13. Gilles Le Garrec & Vincent Touzé, 2017. "La macroéconomie à l’heure de la stagnation séculaire," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(4), pages 79-104.
    14. James D. Hamilton & Ethan S. Harris & Jan Hatzius & Kenneth D. West, 2016. "The Equilibrium Real Funds Rate: Past, Present, and Future," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(4), pages 660-707, November.
    15. Julian Kozlowski & Laura Veldkamp & Venky Venkateswaran, 2020. "The Tail That Wags the Economy: Beliefs and Persistent Stagnation," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 2839-2879.
    16. John Foster, 2021. "The US consumption function: a new perspective," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 773-798, July.
    17. Hughes, Barry B. & Bohl, David & Irfan, Mohammod & Margolese-Malin, Eli & Solórzano, José R., 2017. "ICT/Cyber benefits and costs: Reconciling competing perspectives on the current and future balance," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 117-130.
    18. Takatoshi Ito, 2016. "Japanization: Is it Endemic or Epidemic?," NBER Working Papers 21954, National Bureau of Economic Research, Inc.
    19. Bianchi, Francesco & Kung, Howard & Morales, Gonzalo, 2019. "Growth, slowdowns, and recoveries," Journal of Monetary Economics, Elsevier, vol. 101(C), pages 47-63.
    20. Giraud, Gaël & Grasselli, Matheus, 2021. "Household debt: The missing link between inequality and secular stagnation," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 901-927.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ocp:rpaeco:pb-29-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Policy Center for the New South's Customer service (email available below). General contact details of provider: https://edirc.repec.org/data/ocppcma.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.