The Great Stagnation smells a lot like a purely psychological phenomenon — a matter of narrative rather than a matter of data. For instance, as I mentioned last month, a lot of the recent progress heralded as “the end of stagnation” actually occured during the supposed stagnation. The recent optimism (or triumphalism?) doesn’t appear to be supported by much actual change, or any actual data.

Of course, that doesn’t mean that it’s not coming to an end. If you think of the great stagnation as an economic fact, rooted in data, then we need to wait 5-10 years for new data and careful analysis to come in, before deciding. If you believe “the great stagnation was purely a matter of narrative”, then the fact that Tyler Cowen has declared it over is decisive evidence that it is, in fact, over.

Can “pure narrative” still have real (presumably negative) effects? Sure… probably — although those effects are by no means guaranteed to be what the narrative says they are. A narrative of stagnation might have bigger effects (and/or causes, what’s the difference anyway?) in politics than in innovation, for instance.