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Progress and ConfusionThe State of Macroeconomic Policy$
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Olivier Blanchard, Raghuram G. Rajan, Kenneth S. Rogoff, and Lawrence H. Summers

Print publication date: 2016

Print ISBN-13: 9780262034623

Published to MIT Press Scholarship Online: January 2017

DOI: 10.7551/mitpress/9780262034623.001.0001

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Rethinking Secular Stagnation after Seventeen Months

Rethinking Secular Stagnation after Seventeen Months

Chapter:
(p.29) 3 Rethinking Secular Stagnation after Seventeen Months
Source:
Progress and Confusion
Author(s):

Lawrence H. Summers

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262034623.003.0003

This chapter argues that secular stagnation—a chronic excess of savings over investment—is an important risk throughout the developed world. It contrasts the secular stagnation viewpoint with alternative explanations of recent trends: the debt supercycle view and the savings glut view. The chapter makes a case for pro-productive investment policy as way to absorb global savings in a satisfactory way, while also warning about the risks of using monetary policy to achieve negative real interest rates.

Keywords:   secular stagnation, debt supercyle, savings glut, global economy, investment policy, monetary policy, negative interest rates

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