Accounting for the slowdown in output growth after the Great Recession: A wealth preference approach

Accounting for the slowdown in output growth after the Great Recession: A wealth preference approach | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Accounting for the slowdown in output growth after the Great Recession: A wealth preference approach Kazuma Inagaki, Yoshiyasu Ono, Takayuki Tsuruga This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4792165/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Previous studies have argued that US output growth declined persistently after the Great Recession. To explain the persistent slowdown in output growth, we develop a simple model that incorporates wealth preferences and downward nominal wage rigidity into a standard monetary growth model. Our model predicts that output initially grows at a constant steady rate and slows endogenously afterward. In the model, persistent stagnation occurs together with the declining real interest rate. Applying our model to the US data, we show that it successfully explains the slowdown in output growth along with the declines in the real interest rate. We also examine the model with the Japanese data. The model replicates the persistent stagnation that has been observed since the 1990s. JEL Classification: E41, E47, O10 Secular stagnation Wealth preferences Liquidity preferences the Great Recession Downward nominal wage rigidity Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-4792165","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":341469663,"identity":"082e245f-5224-418f-9f53-abd9fbf1d54f","order_by":0,"name":"Kazuma Inagaki","email":"","orcid":"","institution":"University of Rochester","correspondingAuthor":false,"prefix":"","firstName":"Kazuma","middleName":"","lastName":"Inagaki","suffix":""},{"id":341469664,"identity":"a07dbf31-369d-4ddf-a8e0-ad3c002f234b","order_by":1,"name":"Yoshiyasu Ono","email":"","orcid":"","institution":"Osaka University","correspondingAuthor":false,"prefix":"","firstName":"Yoshiyasu","middleName":"","lastName":"Ono","suffix":""},{"id":341469665,"identity":"00b18e26-45dc-4e04-8a6c-5653e0f275be","order_by":2,"name":"Takayuki Tsuruga","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAABE0lEQVRIiWNgGAWjYBADOTYYSwLGYGzArpQHShuTriURLi+BXSEC2POfMfvM88suvY//8LEPDBV18pLtB9gkGGrsGJhnY7eGRyLHeDZvX3Jum0Ra8gyGM4cNZ/MkALUcS2ZgnHMAhxYeY2beHmagFh5jBsa2A4zzGPK/STCwHWBgnJGAXQv/GZCW+nQ2/vOfgVrq7OfxPwDa8g+PFoYcY2aeH4cT2BhymIFamBNnSwAdBrQOt5YbacWMcxuOGwL9YsyQcOZw8swZD5gtEvuSeXD5hb3/8GaGN3+q5eX7Dz9m+FBRZzvjfALjjQ/f7OQMcYQYGDC2QRlwlwAZPIYzcOtgYPiDTVCeYKSOglEwCkbBCAEAdh9QVTgFVAIAAAAASUVORK5CYII=","orcid":"","institution":"Osaka University","correspondingAuthor":true,"prefix":"","firstName":"Takayuki","middleName":"","lastName":"Tsuruga","suffix":""}],"badges":[],"createdAt":"2024-07-24 04:00:28","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-4792165/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-4792165/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":66356410,"identity":"11b0864b-d5ba-4a16-81d6-676a2d3753c6","added_by":"auto","created_at":"2024-10-10 22:16:30","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":656380,"visible":true,"origin":"","legend":"","description":"","filename":"Manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-4792165/v1_covered_a5319edb-bcac-4e7b-9646-73eee707a45b.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Accounting for the slowdown in output growth after the Great Recession: A wealth preference approach","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Secular stagnation, Wealth preferences, Liquidity preferences, the Great Recession, Downward nominal wage rigidity","lastPublishedDoi":"10.21203/rs.3.rs-4792165/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-4792165/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003ePrevious studies have argued that US output growth declined persistently after the Great Recession. 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