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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So my best guess of what we might have here is a version of Friedman’s ” plucking model ” with full employment serving as a ceiling or capacity constraint combined with some classical notion of the difficulty associated with matching the flow of national saving with the flow of national investment. Shiller Alvin E. Daniel March 8, at 3: Anonymous March 9, at Harberger Robert W. If this be granted, we are forced to regard the factors which underlie economic progress as the dominant determinants of investment and employment.
The rate of economic growth is determined by technological progress and population growth. We have a lot more data at our disposal than Hansen.
After a few years of fairly vigorous recovery, the Federal Reserve, chasing a premonition of a shadow of a ghost of possible inflation that no one else could see, decided to raise interest rates, triggering stabnation severe recession starting in May that lasted through June Congress to oppose the use of unemployment as the main means of fighting inflation.
Having never read Hansen, and frankly still at the beginning stages of my history of economic thought education, I can only ask a question: His treatise re-articulated American business cycle history in terms of Keynesian theory. Franco Modigliani Lawrence R.
In contrast, Hansen seemed to perceive the later s as nothing but the long aftermath of the the Great Depression. Samuelson credited Hansen’s Full Recovery or Stagnation?
But then, that’s the advantage from my view of having deliberate policy to maintain a percentage of the workforce unemployed, it means that those jobs that don’t require skills but are unpopular can still be filled at the lowest possible cost, since someone will be desperate enough to take it out of necessity!
Heck, why not get the Government to fund proper, desirable skills training for the unemployed? The central proposition is that high growth via technology and or population is necessary to keep labor near “full employment” the level of output near seclar. Inhe helped create the US Social Security system and, inhe assisted in the drafting of the Full Employment Actwhich, among other things, created the Council of Economic Advisors. But how do we know what people view as “good paying jobs commensurate with their skills and work ethics?
Very often stagnatiom change can best be described as discontinuous, lumpy, and jerky Adams Arthur T. In his book Business Cycles and National Incomehe defines the cycle as a fluctuation in: It would also be an economy where a large share of profits flowing to the financial sector would be troubling, because it suggests that nonfinancial firms are not perceiving profitable opportunities for real investments in plant, equipment and technology.
I’m not entirely sure why this was the case, especially in light of the subsequent popularity of Keynesian theory.
He received in Ph.
Each of these in turn, severally and in combination, has opened investment outlets and caused a rapid growth of capital formation. Plehn Wesley C. It’s not something we can take for granted. Hansen was appointment as special economic adviser to Marriner Eccles at the Federal Reserve Board in and he was in charge until However, its internal cost structure eventually caught up with its success, leading to its demise.
Personally, I don’t think things were quite as rosy as the narrative above suggests, but let’s stick to the main story.
Alvin Hansen – Wikipedia
In the review, he was mildly disparaging of the GT and concluded that it did not form the basis for a “new economics” yet Hansen went on to develop the IS-LM analysis and penned the seminal “A Guide to Keynes”.
Believe those who are seeking the truth. Schultze Charles P. Henry, I have no idea what accounts for his apparent ambivalence toward Keynes. Taussig Jeremiah W. Depressed expectations over the “prospective rate of profit on new investment” might become a self-fulfilling prophecy see Farmer.
Paul Samuelson was Hansen’s most famous student. How far such a [stimulative] program, whether financed by taxation or borrowing, can be carried out without adversely affecting the system of free enterprise is a problem with which economists, I predict, will have to wrestle in the future far more intensely than in the past. Of first-rate importance is the development of new industries. Littauer Chair of political Economy at Harvard University.
Patten Davis R.