PARTICIPANTS
Larry Summers, TerryAnderson, Michael Boskin, John Cochrane, Mark Duggan, Nicola FuchsSchündeln, Matthew Gentzkow, PaulGregory, Joe Grundfest, John Gunn, Rick Hanushek, Laurie Hodrick, Bob Hodrick, Ken Judd, Tim Kane, Pete Klenow, Stephen Langlois, Greg Rosston, George Shultz, John Taylor, Yuri Yarim-Agaev.
ISSUES DISCUSSED
Lawrence Summers, President Emeritus and Charles W. Eliot University Professor at Harvard University, talked about Secular Stagnation and American Economic Policy. He began by showing how economic growth in the United States and Europe since 2007 has been well below estimated potential growth and that economists at the Congressional Budget Office have been revising potential growth downwards.
He also reported evidence from several economic models showing that there has been a decline in the equilibrium real interest, and noted that the Federal Open Market Committee had been lowering its estimate of the equilibrium real rate for the past three years.
Professor Summers then presented several alternative calculations indicating that the probability of a recession in the next few year was non-negligible. He argued that policy makers and economists should take that into account in thinking about the future course of monetary and fiscal policy, especially in light of the zero bound on the interest rate and the evidence on the decline in the equilibrium interest rate.
Here is a link to a related background paper by Lawrence Summers “Low Equilibrium Real Rates, Financial Crisis, and Secular Stagnation,” from the 2014 Hoover Institution Press publication, Across the Great Divide: New Perspectives on the Financial Crisis edited by Martin Neil Baily, John B. Taylor.
