Cathal McNaughton/ReutersThe weak growth, large output gap, low return on capital, and a host of other economic malaise are widely recognized. There seem to be two main schools. One is associated with Reinhart and Rogoff. They argue that “this time is not different” and that much of disappointment with economic performances are what should be expected given the end of a historic credit cycle and debt crisis.
The other is associated with Summers, who resurrected Alvin Hanson’s 1938 secular stagnation hypothesis. The basic concern here is that the effective demand for capital is not sufficient to absorb the …read more
Source: Business Insider
