Why all economists must learn lessons before next US downturn | Joseph Stiglitz

Secular stagnation advocates should agree on outcome if their preferred policies had been implemented

As Larry Summers rightly points out, the term “secular stagnation” became popular as the second world war was drawing to a close. Alvin Hansen (and many others) worried that, without the stimulation provided by the war, the economy would return to recession or depression. There was, it seemed, a fundamental malady.

But it didn’t happen. How did Hansen and others get it so wrong? Like some modern-day secular stagnation advocates, there were deep flaws in the underlying micro- and macroeconomic analysis – most importantly, in the analysis of the causes of the Great Depression itself.

Related: Weak economic recovery was down to flawed policies, not secular stagnation | Joseph Stiglitz

Inadequate financial regulation left Americans vulnerable to predatory banking behaviour and saddled with enormous debts

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