Economic stagnation since 1973, its nature and causes: A six country survey

Summary

This paper analyses the stagnation experience of the five biggest Western economies and the Netherlands since 1973 in historical perspective. If finds that the slowdown is due to three causes: (1) longer term productivity deceleration; (2) inevitable production/employment disturbance caused in absorbing the two OPEC shocks and the collapse of the Bretton Woods payments arrangements; (3) the switch to overcautious macropolicy as embodied in a new ‘establishment view,’ which keeps growth below potential, as did the ‘Treasury view’ which Keynes attacked in pre-war years.