U.S. Economic Prospects Secular strongStagnationstrong, Hysteresis, and.pdfVIP

Business Economics Vol. 49, No. 2 © National Association for Business Economics U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound LAWRENCE H. SUMMERS* The nature of macroeconomics has changed dramati- Association for Business Economics. It seems to me cally in the last seven years. Now, instead of being that the members of this organization make an enor- concerned with minor adjustments to stabilize about a mous, ongoing contribution to evaluating, understand- given trend, concern is focused on avoiding secular ing, and responding to the flow of economic events. stagnation. Much of this concern arises from the long- I have been coming to these meetings on and off now run effects of short-run developments and the inability for more than 30 years, and I have always been struck of monetary policy to accomplish much more when by the sophistication and relevance of the analyses that interest rates have already reached their lower bound. are provided herein. This address analyzes contemporary macroeconomic Indeed, I think it is fair to say that some of the problems and proposes solutions to put the U.S. econ- themes that are today central to discussions of aca- omy back on a path toward healthy growth. demic macroeconomists, but that had