Handbook of Economic Stagnation

Introduction: Handbook on economic stagnation

A common theme arises in most of the contributions to this volume: aggregate demand drives growth in the short run, the medium term, and the long run. This position stands in contrast to orthodoxy, even of the Keynesian variety. Typically, orthodox economists argue that long run growth depends on growth of the supply of resources, as well as growth of productivity—which in turn depends largely on innovations that enhance productivity of the two main factors of production, labor, and capital. In the short run, demand might play a role, too, as deviations from full capacity utilization can induce or hinder investment in a cyclical manner. Supply side variables dominate in the long run.

Robert Gordon's ...