Friday 28 April h 16-19 – Secular stagnation : a data-based critical discussion
Aula 8 SSSUP
Are we all dead in the long run?
Prof. G. Zezza, University of Cassino
What drives economic growth? Is a slower growth rate, in a country which has already reached a satisfactory standard of living, is something to worry about? Is economic growth sustainable?
Mainstream economic theory studies growth from the supply side, i.e. as growth stemming from the increase in available productive resources, and technical progress. One of its findings is that – absent technical progress – the economy converges to a steady state (zero growth). An implication is the “convergence hypothesis”, namely that countries with lower real income per capita will grow faster than richer countries – under given conditions – so to eventually reach the same standard of living. On the basis of these models, the theory has been extended to study the environmental sustainability of growth and convergence, taking into account the depletion of natural resources, and the impact on the environment of urbanization and industrialization processes.
Empirical evidence on short and medium term growth has cast serious doubts on the realism of mainstream growth theory, and alternative views, which emphasize the role of aggregate demand, as well as of income and wealth distribution, are gaining ground.
In this talk we will briefly present these alternative views with a critical perspective, so to get a better understanding of “secular stagnation”.
Structural reforms and macroeconomic dynamic: the case of labour market
Prof.ssa N. Garbellini, University of Pavia
The view that deregulation of the labour market via “structural reforms” would increase employment and income is in contrast with empirical evidence; on the contrary, the fact that “structural reforms” actually accentuate inequalities seems to be supported by recent evidence. There is, however, a lack of studies concerning the specific implications of ”structural reforms” on growth and functional income distribution. The purpose of the present paper is to bridge the gap by proposing an empirical analysis aimed at verifying testing the existence of statistical relationships between variations of the Employment protection legislation index (EPL) on one side and variations of the real GDP growth and wage share on the other side. Results show that EPL reduction has no correlation with the real growth of GDP, whereas it is significantly correlated with reductions in the wage share. These results contradict the typically neoclassical view that relative prices and functional distribution on the one hand and income growth on the other are closely interlinked. The empirical results of this study are more in line with the alternative theoretical approaches that exclude logical relationships between the functional income distribution and product dynamics.