Did the “Great Recession” Lead to Secular Stagnation and How Should Policy Respond?

Did the “Great Recession” Lead to Secular Stagnation and How Should Policy Respond?

Your assignment is to write an essay that analyzes the debate about secular stagnation in the aftermath of the Great Recession and to recommend policies in a way that is consistent with your diagnosis of the current situation. A complete assessment of the secular stagnation debate requires an understanding of how the economy got into this situation. Therefore, your essay should discuss the sources of the Great Recession and explain why some economists argue that the crisis led to secular stagnation. Your analysis should cover different sides of the debate, but it should lead to a clear statement of your own view about how the stagnation concept does or does not apply to the current state of U.S. economy. Based on this opinion, discuss the best path forward for economic policy.

You need to consider the following concepts and questions:

· What was the source of the Great Recession and how did it lead to the possibility of secular stagnation?

· Link your analysis of what has happened with the Classical and Keynesian macroeconomic perspectives. Discuss how aspects of these theories are (or are not) helpful in explaining the relevant history. Also, your grade will be better if you can build a somewhat nuanced story that demonstrates a deep understanding of the theories.

· When discussing secular stagnation directly, I encourage you to consider ways in which the recent recovery has been different from what happened after earlier recessions.

· Link your policy recommendations in a consistent way to your theoretical and empirical understanding of the secular stagnation debate. Consider how both fiscal and monetary policy could improve the U.S. economy over the next few years.

You should use the readings below to help guide your thinking about the essay. You may use outside resources, but it is not necessary to do outside research that goes beyond the readings.

The target length of the essay is 2,500 words (approximately 5 pages single spaced). Please use 12 point, Times New Roman font.