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Structural Stagnation Dilemma Forum - Assignment Example

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A structural stagnation is a concept describing a state in which the macro economy is inhibited from attaining its potential growth as a result of an underlying misalignment in distribution and allocation of resource (Colander 233). Normally, the growth is impeded in various…
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Download file to see previous pages Further, the economies are suffering because of shortfall of investments in education and infrastructure. For structural stagnations, the major causes are categorized into long term short term. The long term causes are globalization, exchange rates and trade deficit while short term is associated to the aftermath of financial crisis.
As shown in figure 11-3, by Colander, a graph showing policy implication of structural stagnation, the policy makers are deemed to target a higher potential output as a result of the dilemma (Colander 238). In which case, Aggregate Supply (AS) and Aggregate Demand (AD) model explains that “too high targeting”, than is sustainable, on aggregate output creates a financial bubble. The financial bubble in turn causes slow growth in macro economy and high unemployment rate.
In contemporary society, the definition of economic growth and employment goes hand in hand with technological change. At times of volatility and impeded economic growth, many economies are relying on technology to create jobs and facilitate innovation and development. The technology industry has initiated direct job creation, especially in the ICT sector that now features among the largest employers. Apart from being an employer, technology also boosts economic growth through its contribution to GDP growth. For instance, E-commerce is pervasive in most economies and constitutes a considerable portion of their overall GDP. However, the technological change has brought with it both negative and positive impacts on employment. The introduction of machinery, working like man, has brought about unemployment in subject industries. Many workers are laid off as a result of technological transition taking course.
Even though globalization has been evident to lift many out of poverty, it does have contradiction in terms of the structural changes it forces US to undergo. The ...Download file to see next pagesRead More
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