Stagnation in a historical perspective

The paper focuses on the recent resurfacing of the question of secular stagnation. Prompted as it appears from the severity and continuing effects of the 2008-2009 crisis the paper argues that this is a good example of how the history of economic ideas is indispensable to understand current issues. Underneath much of the discussion of the crisis there seems to be the idea of a resumption of growth based on a “return to normal” scenario. That overlooks the exceptional character of the crisis. The last ten years would then be only a severe downturn in the growth path. The problem is instead the pattern of growth on which industrialized economies settle in and whether it creates the conditions for an expansive transformation. The likely alternative is stagnation. There is little sign that this perspective is penetrating economists’ thinking and the solutions offered by the mainstream. We have observed however the return to the fore of the question of “secular stagnation” It found its way into the discussion on the crisis thanks to Lawrence H. Summers who first mentioned secular stagnation in his comments at an IMF conference in honor of Stanley Fisher. The topic has attracted enough attention among mainstream economists to be the subject of a panel at the 2015 conference of the American Economic Association, with contributions by Robert Gordon, Barry Eichengreen and Summers.