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PKSG Working Paper Series

Working Paper PKWP1609

Secular stagnation and progressive economic policy alternatives

May 2016

Özlem Onaran

This paper summarizes two main findings in the Post-Keynesian literature regarding the linkages between financialization, income distribution, accumulation and productivity. Firstly, at the core of secular stagnation lies the missing link between profits and investment. Secondly, rising inequality and financialization have been the main reasons for this missing link and hence the major brakes against capital accumulation and growth. The paper concludes with alternative progressive policies based on a coordinated policy mix of equality-led development and public investment.

Keywords: wage share, inequality, wage-led growth, financialization, secular stagnation, public investment

JEL classification: E12: General Aggregative Models: Keynes; Keynesian; Post-Keynesian E22: Investment; Capital; Intangible Capital; Capacity E25: Aggregate Factor Income Distribution

Download: Working Paper PKWP1609