From Conversable Economist:
Secular Stagnation: Back to Alvin Hanson
In December 1938, one of the most eminent economists of the time, Alvin E. Hansen, delivered the Presidential Address, titled "Economic Progress and Declining Population Growth," at the annual meetings of the American Economic Association. Looking at the economy of the late 1930s, Hansen wrote: "This is the essence of secular stagnation--sick recoveries which die in their infancy and depressions which feed on themselves and leave a hard and seemingly immovable core of unemployment." The idea of "secular stagnation" has received considerable attention in the last month after it was involved in a talk given by Larry Summers at an IMF conference as a framework for thinking about the discomfiting state of the economic recovery. A round-up of some commentary and responses to the Summers talk is available here. In this post, I'll sketch out what Hansen actually said, give a sense of why the "secular stagnation" hypothesis was widely disregarded in recent decades, and suggest how I see the modern lessons....MORE
