Reflections on the new 'Secular Stagnation hypothesis'
Friday, October 31, 2014
The notion that Europe and other advanced economies are suffering secular stagnation is gaining traction. This column by Larry Summers -- first published in the Vox eBook "Secular Stagnation: Facts, Causes and Cures" -- explains the idea. It argues that a decline in the full-employment real interest rate coupled with low inflation could indefinitely prevent the attainment of full employment.