Macroeconomics
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Financial Markets Have Taken Over the Economy. To Prevent Another Crisis, They Must Be Brought to Heel.
Feb 13, 2018
Banks have long had undue influence in society. But with the rapid expansion of a financial sector that transforms all debts and assets into tradable commodities, we are faced with something far worse: financial markets with an only abstract, inflated, and destabilizing relationship with the real economy. To prevent another crisis, finance must be domesticated and turned into a useful servant of society.
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When Demand Shapes Supply
Feb 11, 2018
Contrary to the neoclassical model’s assumptions, shifts in aggregate demand have persistent effects on GDP
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Working Paper Series
Persistent Effects of Autonomous Demand Expansions
Feb 2018
The prevailing wisdom that aggregate demand ‘shocks’ determine short-run cyclical fluctuations around a supply-determined equilibrium growth rate and an associated equilibrium unemployment rate (or NAIRU) has been called into question by various streams of literature in the last decades. Specifically, a recently revived literature on hysteresis finds significant persistence in the effects of recessions and negative aggregate demand shocks (Blanchard et al. 2015; Martin et al. 2015).
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How Public Spending Creates Jobs and Growth—Without Inflation
Dec 21, 2017
Contrary to conventional wisdom, government stimulus can improve the health of the economy for years after, without inflationary side effects
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What Mainstream Economists Get Wrong About Secular Stagnation
Dec 21, 2017
Forget the myth of a savings glut causing near-zero interest rates. We have a shortage of aggregate demand, and only public spending and raising wages will change that.
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Servaas Storm: Secular Stagnation, Loanable Funds and the ZLB
Dec 16, 2017 |
Servaas Storm’s commentary on the papers presented at the secular stagnation conference.
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Conference paper
Transition to Slower Population Growth: Demography and its Effect on Real Interest Rates
Dec 2017
The past 30 years has witnessed a worldwide decrease in real interest rates. We demonstrate that a large part of the fall in interest rates can be explained by changes in demography, which are as the result of a sudden fall in fertility rates across all of the advanced economies in the early 1970s.
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Conference paper
Endogenous Technology Adoption and R&D as Sources of Business Cycle Persistence
Dec 2017
We examine the hypothesis that the slowdown in productivity following the Great Recession was in significant part an endogenous response to the contraction in demand that induced the downturn.
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Conference paper
Secular Demand Stagnation in the 21st Century U.S. Economy
Dec 2017
The concern that an economy could experience persistent, and in some sense unusual, weakness goes back to Keynes’s General Theory and led Alvin Hansen to coin the term “secular stagnation.”
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Conference paper
Aging, Output per capita and Secular Stagnation
Dec 2017
This paper shows that aging has positive effect on output growth per capital at positive interest rates, due to capital deepening.
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Conference paper
Stagnation Traps
Dec 2017
We provide a Keynesian growth theory in which pessimistic expectations can lead to very persistent, or even permanent, slumps characterized by high unemployment and weak growth.
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Commentary
Some Thoughts on Secular Stagnation, Loanable Funds and the ZLB
Dec 2017
I have read the various conference papers and am struck by the fact that many use the (omnipresent New-Keynesian) model of an aggregate loanable funds market to diagnose secular stagnation and investigate possible remedies.
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Conference paper
The Rate of Return on Everything, 1870–2015
Dec 2017
This paper answers fundamental questions that have preoccupied modern economic thought since the 18th century.
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Conference paper
Are Low Real Interest Rates Here to Stay?
Dec 2017
Long-term real interest rates across the world are low, having fallen by about 450 basis points (bps) over the past thirty years.
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Conference paper
A Model of Secular Stagnation: Theory and Quantitative Evaluation
Dec 2017
This paper replaces an earlier version of a paper released in 2014 under the title “A Model of Secular Stagnation.”