Secular stagnation: Is immigration part of the solution?

Abstract

We review the secular stagnation hypothesis, first postulated by Hansen in 1939, to describe the current macroeconomic dynamics faced by developed economies. We argue that these economies are experiencing secular stagnation and that demographic factors play a significant role in this macroeconomic environment. Using a panel data analysis covering the period 1965–2020 for 15 European Union economies, our paper suggests that immigration should be considered as a potential solution to this problem. Our results show that demographic factors do indeed play a significant role in secular stagnation and that immigration has a positive impact in this macroeconomic context.