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We respond to the call for future research on degrowth and specifically analyze the implications of economic degrowth on the monetary and financial system. We argue that any early indications of degrowth would cause the stock market to crash, which would trigger further deleveraging (contagion) and a deflation. As a result, the economy would implode, which would eventually allow for a new rapid growth cycle, given the likely extraordinary fiscal and monetary policy response during the implosion. Thus, in our view, degrowth as an explicit strategy option is economically unsustainable and unfeasible. As a limitation, our analysis centers on the examples of unplanned crisis leading to an economic implosion, which imperfectly represent the idea of planned/voluntary degrowth.

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Stock Market , deflation , Deleveraging , Degrowth

Studia Iranica

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