HKS Affiliated Authors

Frank and Denie Weil Director of the Mossavar-Rahmani Center for Business and Government
Charles W. Eliot University Professor


Continuing Relevance of Secular Stagnation. Lawrence Summers, March 13, 2018, Paper, "With the election of Donald Trump, increases in interest rates and stock prices and a possible uptick in growth interest in the secular stagnation hypothesis has waned. I argue this is a misreading of current reality. First, there may well be slack in the economy; Second, there is every reason to believe that neutral real rates have declined on a semi-permanent basis and that this will have major implications for economic performance going forward; Third, the kind of "sugar high" we are now seeing in markets is exactly what we would expect to see if neutral rates had, in fact, declined; Fourth, markets continue to forecast well below target inflation in the industrial world." Link