econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 19 April 2016

Flawed Assumptions And Grand Experiments

from Lakshman Achuthan, Co-Founder and Chief Operations Officer of ECRI

This year began with recession fears throwing a spotlight on the elephant in the room. As the cover of The Economist put it a few weeks back - central banks may be out of ammo to fight recession ...

I presented "Flawed Assumptions and Grand Experiments," at the Levy Economics Institute's 25th Annual Hyman P. Minsky Conference this past week.

Key points are summarized below, and please follow this link to the presentation slides, which include notes.

Central banks may be out of ammo to fight recession.

In the summer of 2008, before Lehman blew up and many years before the secular stagnation debate, we showed that the pace of expansions had been stair-stepping down since the 1970s.

The weakening growth trends in labor productivity and the potential labor force are key to this structural decline in overall economic growth.

We've also shown why the case for a strong recovery beyond the first year following a deep recession is not supported by the evidence, as we had originally concluded back in 2009.

Therefore, the discourse among policymakers, trying to explain their disappointment with growth and prescribing additional solutions, has been based largely on flawed assumptions that trend growth was actually higher than it turned out to be, and that we were somehow owed a return to that long-term trend.

As a result, policy initiatives designed to blast the economy toward "escape velocity" wound up being not only misguided, but also futile.

  • For central banks in general, credibility is the most important asset, and even for the Fed, market-based and survey-based five-to-ten-year-ahead inflation expectations show little faith that it can reach its inflation target.

  • If you're going to embark on Grand Experiments, you'd better make sure that your assumptions are rock-solid. But as we've shown, there should have been serious doubts in the first place about some key assumptions underlying central bank policy.

Ultimately, only policies that genuinely address the challenges of demographics and productivity have a chance to succeed.

[Continue reading from presentation materials and notes]

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Are You Feeling the Economic Surge?
Big Mess in Italy
News Blog
Fidel Castro And The Revolution That Almost Wasn't
America Trumps Allies In Defense Spending
What We Read Today 04 December 2016
How Much Money It Costs To Make Money
Multiple Jobs Needed To Make Ends Meet
The Final Crisis Chronicle: The Panic Of 1907 And The Birth Of The Fed
Is There A Gender Wage Growth Gap?
Moving Averages Can Identify A Trade
Infographic Of The Day: Hobbies That Will Make You Money
Earnings And Economic Reports: Week Starting 05 December 2016
Early Headlines: Green Pty Cancels - Then Appeals PA Recount, IRS Serves Summons On Bitcoin Co, Most Mfg Jobs Lost To Automation, 2017 US Hosing Outlook And More
The Smartphone Market Is Not A Two-Horse Race
Italy's Referendum: What's At Stake And What You Need To Know
Investing Blog
How To Invest When The Fed Destroys Capitalism
Technical Thoughts: Manage Risk
Opinion Blog
Why Did Trump Win? A Different Perspective, Part 3
Jobs Without Disruptions Through Concordian Economics
Precious Metals Blog
Silver Prices Rebounded Today: Where They Are Headed
Live Markets
02Dec2016 Market Close: WTI Crude Climbed Back Up To Previous 51 Handle, US Dollar Index Trading At The100 Level, Oil Rig Count At 10-Month High
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government



Crowdfunding ....






























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved