Secular stagnation? Growth, asset returns and welfare in the next decades: first results
- Ongoing demographic change will lead to a relative scarcity of raw labor to the effect that output growth will be decreasing in the next decades, a secular stagnation. As physical capital will be relatively abundant, this decrease of output will be accompanied by reductions of asset returns. We quantify these effects for the US economy by developing an overlapping generations model with risky and risk-free assets. Without adjustments of human capital, risky returns decrease until 2035 by about 0.7 percentage point, and the risk-free rate by about one percentage point, leading to substantial welfare losses for asset rich households. Per capita output is reduced by 6%. Endogenous human capital adjustments strongly mitigate these effects. We conclude that human capital policies will be crucial in the context of labor shortages.
| Author: | Christian GeppertGND, Alexander LudwigORCiDGND, Raphael Abiry |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-416971 |
| URL: | https://ssrn.com/abstract=2841555 |
| DOI: | https://doi.org/10.2139/ssrn.2841555 |
| Parent Title (English): | SAFE working paper series ; No. 145 |
| Series (Serial Number): | SAFE working paper (145) |
| Publisher: | SAFE |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2016 |
| Year of first Publication: | 2016 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2016/10/20 |
| Tag: | demographic change; equity premium; growth; human capital; natural rate; overlapping generations; secular stagnation; welfare |
| Issue: | September 8, 2016 |
| Page Number: | 41 |
| HeBIS-PPN: | 390298387 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
