'Secular stagnation', the idea that potential growth is now permanently lower, has gained ground in the wake of the financial crisis. The market uses this idea to justify ever lower bond yields, but the research is often taken out of context. The IMF has recently made an estimate of potential growth, and surprisingly found potential growth has started recovering. Yet in emerging markets, potential growth is only now starting to slow.
About the authors
Economist Insights is written by Joshua McCallum and Gianluca Moretti. Joshua has been working at Global Asset Management with the title of Senior Fixed Income Economist since 2005. Prior to this, he worked at the UK Treasury as a macroeconomist. Gianluca joined Global Asset Management in 2010. Prior to this he worked at the Italian central bank.
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