Secular Stagnation: Demand Is Indeed the Culprit


Naked Capitalism has the article Secular Stagnation: Demand Is Indeed the Culprit.

Stagnation is a sad instance of iatrogenesis: a pathology caused by the exact economist experts whose task it is to improve the economy’s health. To fail better, we must try again and discard ‘decided opinion’ that secular stagnation is an exclusively supply-side phenomenon and recognize that demand drives growth ‘all the way’ (see also Taylor et al. 2019). Without new economic thinking, macro policy will retain its deflationary biases and secular stagnation remains the ‘normal’.

If I ignore all the economic research of the last 50 years, and hark back to what I learned in the early 1960s, I end up with the same conclusion as this article. Actually, this article does the analysis to back up the conclusion that John Maynard Keynes was right in the 1930s when he explained why the the economy behaves the way it does.

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