Economic stagnation

Economic stagnation is a prolonged period of slow economic growth (traditionally measured in terms of the GDP growth), usually accompanied by high unemployment. Under some definitions, 'slow' means significantly slower than potential growth as estimated by macroeconomists, even though the growth rate may be nominally higher than in other countries not experiencing economic stagnation.The term 'secular stagnation' was originally coined by Alvin Hansen in 1938 to 'describe what he feared was the fate of the American economy following the Great Depression of the early 1930s: a check to economic progress as investment opportunities were stunted by the closing of the frontier and the collapse of immigration'.'But, whereas business-cycle theory treats depression as a temporary, though recurring, phenomenon, the theory of secular stagnation brings out the possibility that depression may become the normal condition of the economy.' The U.S. economy of the early 19th century was primarily agricultural and suffered from labor shortages.Japan has been suffering economic or secular stagnation for most of the period since the early 1990s. Economists, such as Paul Krugman, attribute the stagnation to a liquidity trap (a situation in which monetary policy is unable to lower nominal interest rates because these are close to zero) exacerbated by demographics factors.