Anemic economic growth in advanced economies: structural factors and the impotence of expansionary macroeconomic policies

This paper assesses the role of some structural factors in determining the current anemic growth of the advanced economies, especially focusing on Southern Europe. It discusses what macroeconomic policies can do for reviving growth and illustrates some hypotheses: policy makers’ attempts to push GDP growth above its sustainable long-term rate through expansionary policies, excessive leverage and rising private and public debt generate instability and imbalances; economic fundamentals and easy credit push up the price of residential and and urban rents, thus crowding out investment in productive assets and depressing long-run growth; supporting asset prices, central banks may end up exacerbating the causes making growth anemic; Summers’ secular stagnation and its policy implications do not appear very plausible; the persistency of wide competitiveness imbalances among different areas determines an unequal spatial distribution of high value-added activities, which collides with the worldwide tendency towards the equalization of workers’education levels and aspirations.