, Volume 46, Issue 2, pp 369–380 | Cite as

The decline in investment shares is not caused by falling relative prices of capital: a note

  • Leon PodkaminerEmail author
Original Paper


Secularly declining GDP investment shares are often explained by the widespread fall in the relative price of investment goods. Granger non-causality tests applied to longer-term time series for a large number of industrial countries tend to reject that explanation.


Relative prices of capital Investment shares Secular stagnation Granger causality 

JEL Classification

E22 O11 C32 



The author thanks two anonymous referees for helpful comments.


  1. Backhouse RE, Boianovsky M (2015) Secular stagnation: the history of macroeconomic Heresy. Blanquie Lecture, RomeGoogle Scholar
  2. Buiter W, Rahbari E, Seydl J (2014) The Long-Run Decline in Advanced-Economy Investment. citi Research, 11 JuneGoogle Scholar
  3. Canuto O, Nallari R, Griffith B (2014) Sluggish postcrisis growth: policies, secular stagnation and outlook. The World Bank Economic Premise, no. 139Google Scholar
  4. Gordon JR (2015) Secular stagnation: a supply-side view. Am Econ Rev Pap Proc 105(5):54–59CrossRefGoogle Scholar
  5. Gourinchas PO, Portes R, Rabanal P (2016) Secular stagnation, growth, and real interest rates. IMF Econ Rev 64(4):575–580CrossRefGoogle Scholar
  6. Hall RE (2017) The Anatomy of stagnation in a modern economy. Economica 84(1):1–15CrossRefGoogle Scholar
  7. Mollick AV, Faria JR, Albuquerque PH, Leon-Lendesma MA (2008) Can globalisation stop the decline in commodities’ terms of trade? Camb J Econ 32(5):683–701CrossRefGoogle Scholar
  8. Podkaminer L (2015) The euro area’s secular stagnation and what can be done about it. A post-Keynesian perspective. Real World Econ Rev 70:1–15Google Scholar
  9. Podkaminer L (2017) The slowdown in labour productivity growth is an effect of economic stagnation rather than its cause. Acta Oecon 67:67–77CrossRefGoogle Scholar
  10. Rachel L, Smith TD (2015) Secular drivers of the global real interest rate. Bank of England staff working paper no. 571Google Scholar
  11. Teulings C, Baldwin R (2014) Secular stagnation: facts, causes, and cures, eBookGoogle Scholar
  12. Thwaites G (2015) Why are real interest rates so low? Secular stagnation and the relative price of investment goods. Bank of England Staff Working Paper No. 564Google Scholar
  13. Toda HY, Yamamoto T (1995) Statistical inference in vector autoregressions with possibly integrated processes. J Econom 66(1–2):225–250CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.The Vienna Institute for International Economic StudiesViennaAustria
  2. 2.Bielsko-Biala School of Finance and LawBielsko-BiałaPoland

Personalised recommendations