CdLM Business Administration

In the first part of this course we focus upon the recent debate on
stagnation, i.e. the reasons why today most advanced economies, like the US, Japan or Europe grow much less than forty or fifty years ago.In particular, we will discuss
the explanations provided two main approaches or paradigms: namely,
standard neoclassical theory and Keynesian theory.

The first approach holds that stagnation is not rooted in internal
problems of market economies. but caused by external ‘threats', such
as bad institutions, demographic changes and a slowdown in
technological innovation.

The second approach holds instead that stagnation is due to a major
internal problem of the
economy: namely, a lack of aggregate demand.This problem may be due to
various factors, such as inequality in income and wealth distribution
and uncertainty that leads consumers to hold money rather than spend
and investors to postpone their decisions.