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Financial Times: The age of secular stagnation may be drawing to a close
June 30, 2021
From the op-ed:
The Biden administration’s fiscal stimulus plans have come under attack from macroeconomists worried that they will trigger inflation. The unprecedented size of the package, at $1.9tn, certainly warrants anxiety. Yet some of the fiercest attacks have come from proponents of the secular stagnation hypothesis. This is curious because the hypothesis implies that higher inflation is a feature — not a bug — of any strategy to revive growth.
The secular stagnation hypothesis argues that low investment has depressed aggregate demand, dragging down growth and inflation. Based on this diagnosis, economically advanced countries have for decades been trying to boost aggregate demand, so far without much success.