No Evidence of Secular Stagnation in the Euro Area

Despite relative robust growth over the last couple of years, the recovery in the euro area looks lackluster in historical comparison. This growth performance of the euro area in the face of very accommodative monetary policy has led some commentators to talk about a “secular stagnation” – an inability of monetary policy to generate a forceful and lasting rebound in economic activity. Th is report comprises a factu al check of this theory in the euro a rea by focusing on savings and investment. Households and corporates have shown opposing behavior since the crisis. If the forme r are progressively decreasing their saving rate , the opposite is true for the latter. It is the high corporate savings, and the sluggish investment spending that demand an explanation. After decomposing corporate gross saving s by industry, we try to understand the determinants which lie behind the “corporate saving s glut” . While it is difficult to find the one explanation, we think that a rise in intangible investment s is an important driver of corporate savings at this point . Thus, there is not really evidence for secular stagnation but rather a structural change in corporate investment patterns.