Eurozone | Secular stagnation is real. Getting out of it will be hard

The eurozone has a serious problem: It’s stuck in secular stagnation, a world of ultra-low interest rates, below-target inflation, and underwhelming potential output growth. And getting out of it will take some extremely bold measures. 

Download our analysis to find out:

• A combination of lower fertility rates, higher longevity, sluggish productivity growth, a global savings glut, and several other secular forces have come together in a disruptive alliance to push interest rates below zero.

• We find that the real neutral rate, i.e., the real interest rate consistent with a closed output gap and inflation at target, has fallen from 6.6% in 1980 to roughly -2% in 2018.
• Of the nine secular forces we study, trends in fertility and longevity turn out to be the most important by far, followed by the slowdown in productivity.