On the secular stagnation puzzle: high profits meet low investment

• Autor(a) principal: Marques, Maria Francina Magalhães
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/118902
• topic: Secular stagnation; Under-investment; Innovation; Concentration; Capital; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

The renewed Secular Stagnation hypothesis, put forward to explain the sluggish growth in the developed economies alongside a low interest rates and low inflation environment, has been largely considered in the literature. These are signs of under-investment relative to saving. However, recently, some economists have be gun to not e how puzzling these trends are, given that profitability has been high. Therefore, this paper approaches the puzzle that the current low investment in spite of high profits poses, evidencing that a possible reason may lay in the fact that concentration can contribute to hinder investment. Consequently, this has detrimental effects on economic growth and overall welfare, and possibly stagnation. We expose the reasoning behind the hypothesis as well as how it can be linked to the Secular Stagnation debate. Ultimately, our empirical analysis reveals that, in fact, we cannot reject that concentration may harm investment.