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Aggregate demand policy in mature and dual economies

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  • Peter Skott

    (University of Massachusetts - Amherst)

Abstract

Aggregate demand is important, both in the short and the long run, but a basic distinction must be made between dual and mature economies. Mature economies may suffer from a structural aggregate problem ('secular stagnation'): full-employment growth may be impossible in the absence of sustained fiscal stimulus. Dual economies with high levels of open or hidden unemployment, by contrast, do not face long-run structural aggregate demand problems. They require public investment in key areas, including education and infrastructure, but the key problems concern the composition of demand and the need to expand the modern sector. These economies face structural transformation problems.

Suggested Citation

  • Peter Skott, 2019. "Aggregate demand policy in mature and dual economies," UMASS Amherst Economics Working Papers 2019-21, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2019-21
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    File URL: https://scholarworks.umass.edu/econ_workingpaper/279/
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    Cited by:

    1. Strauss, Ilan & Yang, Jangho, 2020. "Corporate Secular Stagnation: Empirical Evidence on the Advanced Economy Investment Slowdown," INET Oxford Working Papers 2019-16, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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