IMF Economic Review

, Volume 66, Issue 2, pp 226–250 | Cite as

Secular Stagnation and Macroeconomic Policy

  • Lawrence H. SummersEmail author
Commissioned Research Article


Secular stagnation theory has developed substantially recently and offers substantial insights that policymakers have yet to fully internalize. This paper reviews the considerations that led me to revive the secular stagnation idea, summarizes the theory as I understand it today, and argues that events since I started advocating the secular stagnation view have tended to confirm its predictions and reject those of its critics. It addresses the various objections, both theoretical and empirical, that have been put forward to the secular stagnation idea, and argues that if secular stagnation is a central macroeconomic issue, much of the conventional wisdom regarding macroeconomic policy needs to be rethought. Contrary to current orthodoxy, monetary policies may be able to have lasting impacts on levels of output but not to determine rates of inflation. Fiscal policies may be essential for assuring full employment and financial stability. Increases in government indebtedness may contribute to financial stability.

JEL Classification

E22 E32 E60 E62 E63 


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Copyright information

© International Monetary Fund 2018

Authors and Affiliations

  1. 1.Charles W. Eliot University Professor and President Emeritus, John F. Kennedy School of GovernmentHarvard UniversityCambridgeUSA

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