The Way Out of the Slump

Paul Krugman and Robin Wells:

The Way Out of the Slump: Most of the time, we count on central banks to engineer economic recovery following a slump... cut the short-term interest rates it controls; market-determined longer-term rates fall in sympathy; and the private sector responds by borrowing and spending more.

The sheer severity of the slump after the 2008 housing bust means, however, that this normal response falls far short of what’s needed.... [C:]onventional monetary policy...