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Economic Policy
Video

Economic Policy

Policy Responses to Crises

IMF, 2013

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Editorial Rating

7

Qualities

  • Controversial
  • Eye Opening
  • Visionary

Recommendation

Economist Lawrence Summers is not backward in coming forward. His lecture delivers a bold – though cryptic – message: He posits the prospect of ongoing “secular stagnation.” Summers questions whether current fiscal and monetary policies are sufficient, or even appropriate, to generate the jobs and growth that would propel a recovery. His ideas aren’t wholly novel, but, considering Summers’s position as a member of the economic establishment, his frank views are refreshing. getAbstract recommends his noble effort to question current US economic policy.

Take-Aways

  • Four years into the recovery, the US economy is performing below potential. GDP and unemployment are languishing. The US may be facing a period of “secular stagnation.”
  • Low inflation before and after the 2008 financial panic is an oddity in light of easy monetary conditions.
  • A negative natural equilibrium rate of interest (of -2% or -3%) may explain the observed low inflation and mediocre employment situation.

About the Speaker

Lawrence Summers was director of President Obama’s National Economic Council until 2010. His previous positions include US Treasury secretary, president of Harvard University and chief economist of the World Bank.


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