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Reflections on the new 'Secular Stagnation hypothesis'

Friday, October 31, 2014

Category: Economics

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.

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