2021/09 LEM Working Paper Series

An Agent-based Model for Secular Stagnation in the USA: Theory and Empirical Evidence

Andrea Borsato
Secular Stagnation; Innovation dynamics; Income distribution; Agent-based SFC models; US manufacturing industries; Panel cointegration analysis.

  JEL Classifications
E10, O31, O38, O43, P16
The paper extends the research started with Borsato (2020). I develop an agent-based, stock-flow consistent growth model to analyze the interplay between income distribution, innovation and productivity growth. Results still show that the mounting shrinkage of the labour share impacts negatively upon firm’s innovative effort. Additionally, I question the neoclassical belief on the negative interest-elasticity of investments, since decreases in the rate of interest are not associated with increases in capital accumulation. Finally, the panel cointegration analysis based on US manufacturing industries corroborates the theoretical predictions for the period 1958 − 2011.
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