In December , one of the most eminent economists of the time, Alvin E. Hansen, delivered the Presidential Address, titled “Economic. Summers’ theory of “secular stagnation” (a term first used by the economist Alvin Hansen back in ) holds that, in the United States, the. Recently, Hansen’s secular stagnation hypothesis has gained renewed stagnation in the US in much the same way as suggested by Alvin Hansen in
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Presidents of the American Economic Association. Hansen’s advocacy with Luther Gulick during World War II of Keynesian policies to promote post-war full employment helped persuade Keynes to assist in the development of plans for the international economy.
Back to Alvin Hansen.
MacroMania: Alvin Hansen’s Secular Stagnation Hypothesis
What Hansen had in mind was not just counter-cyclical public spending to stabilize employment but rather major projects such as rural electrification, slum hansfnand natural resource development conservation, all with a view of opening up new investment opportunities for the private sector and so, restoring the economic dynamism needed to the system as a whole.
And even if we should find support for the hypothesis, there is the question of what sort of intervention, if any, might be desirable. This was signalled by the collapse of the Tokyo property market in the late s. I hear relatively little discussion focused directly on an agenda for creating a supportive environment for private domestic investment.
Doubt those who find it. Millis John M.
Posted by David Andolfatto at 1: Taussig Jeremiah W. Hansen married Mabel Lewis: More effectively than anyone else, he explicated, extended, domesticated, and popularized the ideas embodied in Keynes’ The General Theory.
He was, of course, plainly concerned that the trend might continue, but that’s not the same thing as asserting it would. Kindleberger Alice M. Solow Moses Abramovitz William J. He also advocated fiscal and other stimuli to ward off the stagnation that he thought was endemic to mature, industrialized economies.
Fuchs Anne O.
And while medical technology played seculaar big role in lowering mortality rates in the 19th and early 20th century, “no important further gains in this direction can possibly offset the prevailing low birth rate.
Roberston for this view, but it is also a recurring theme in Schumpeter’s work see my earlier post relating Schumpeterian growth to secular stagnation. So that’s roughly the evidence. Economic Progress and Declining Population Growth. Dewey Edmund J. No doubt the next burst of growth and the next Great Moderation will be ascribed to the brand of monetary policy that is next captured by public fashion when in actuality it will be due to growth re-ignited by a new burst of technological innovation and commercialization.
I sometimes hear people suggest that Hansen’s hypothesis fell out of favor because it was proved wrong.
It seems clear that Hansen is suggesting that the low employment observed in a low-growth regime is inefficient. We also have the disturbing example of Japan’s economy, which suffered a financial crisis and melt-down in real estate prices back in the early s, and seular now been stuck in slow growth for more than two decades. I think of Keynes as an explanation for depressed levelsunrelated to growth phenomena.
But the story above is incomplete. The theory should be evaluated on other grounds. David Andolfatto March 7, at Views Read Edit View history. Barnett William Z. He is best known for introducing Keynesian economics in the United States in the s. It is theoretically possible to generate secular stagnation in an RBC model, where a low-growth regime generates a low-employment regime.
But such new developments are not currently available in adequate volume Yet here we are in latemore than four years after the Great Recession technically ended in mid, but without a real resurgence of catch-up economic growth that has followed sechlar recessions. He could see the stagnation of investment and the inability of capitalism to bring the required level of investment forth.
At a macro level, Field points out that essentially the same number of people were employed in as inusing what seems to be the same value of capital stock, and yet real output was one-third or more higher in than in implying substantial productivity growth even with the period of the Great Depression taken into account.
Active demand management sounds more appealing than dismantling trade unions, I suppose. Let’s think about what hznsen must have looked like for Hansen in late Williams Harold A. Ergoa higher rate of growth over long periods of time begets a higher rate of resource utilization over the same period of time higher average employment rate, lower average unemployment hannsen. When we look back at Hansen’s speech of latewe see the issues seculr his time a little differently.
But how does one measure “want a job” from available data? Arrow Walter W.