Secular Stagnation, Growth and Real Interest Rates, Conference at the EUI, June 18 and 19, 2015

EUI-quadrato-singolo-logo_400x400I have been attending a conference organized by the  CEPR, the IMF and the EUI. I was discussing a nice paper of Julian Kozlowski, Laura Veldkamp and Venky Venkateswaran entitled “The Tail that Wags the Economy: Belief-Driven Business Cycles and Persistent Stagnation”.

See here for my discussion and here for the page of the conference, from which I copy the following:

In advanced economies, real interest rates have been falling since the early 1980s. Yet investment has not risen, and growth has slowed. Lawrence Summers, in a speech at the IMF in November 2013, invoked the possibility of ‘secular stagnation’. Inflation has come down, and major central banks target 2%. Nominal interest rates cannot go significantly below zero – the ‘zero lower bound’. Hence real interest rates cannot go much below zero either, so they may not get low enough to equate investment with savings at a full-employment level of output. Hence secular stagnation – slow growth of output as far as one can see. There are hugely important theoretical, empirical and policy issues here, and since the Summers specch, many top researchers have taken up the challenge. What is the equilibrium real rate of interest? If it has fallen, what are the forces behind that, and are they likely to reverse?


The program of the conference was:

Session 1: Beliefs, Labor Markets and Secular Stagnation

Chair: Pau Rabanal (IMF, Associate Editor of the IMF Economic Review)

The Tail that Wags the Economy: Belief-Driven Business Cycles and Persistent Stagnation Julian Kozlowski (New York University), Laura Veldkamp (New York University Stern School of Business), and Venky Venkateswaran (New York University Stern School of Business)

Discussant: Franck Portier (Toulouse School of Economics)

The Dark Corners of the Labor Market Vincent Sterk (University College London)

Discussant: Claudio Michelacci (Einaudi Institute for Economics and Finance)

Session 2: Secular Stagnation and Investment

Chair: Pierre-Olivier Gourinchas (University of California at Berkeley, CEPR, and Editor in Chief of the IMF Economic Review)

The Corporate Saving Glut in the Aftermath of the Global Financial Crisis
Joseph Gruber (Board of Governors of the Federal Reserve System) and Steven Kamin (Board of Governors of the Federal Reserve System)

Discussant: Catherine L. Mann (OECD)

Why are Real Interest Rates so Low? Secular Stagnation and the Relative Price of Investment Goods
Gregory Thwaites (Bank of England)

Discussant: Neil Mehrotra (Brown University)

Session 3: Bubbles and the Global Dimension of Secular Stagnation

Chair: Ramon Marimon (EUI)

Credit Bubbles and Liquidity Traps: Implications for Monetary Policy
Vladimir Asriyan (CREI and Universitat Pompeu Fabra), Alberto Martin (CREI, Universitat Pompeu Fabra and CEPR) and Jaume Ventura (CREI, Universitat Pompeu Fabra and CEPR)

Discussant: François Geerolf (UCLA)

Contagious Malady? Global Dimensions of Secular Stagnation Gauti Eggertsson (Brown University), Neil Mehrotra (Brown University), Sanjay Singh (Brown University), and Lawrence H. Summers (Harvard University)

Discussant: Jaume Ventura (CREi)

Keynote Speech By Lawrence H. Summers (Harvard University)

Session 4: Real Interest Rates

Chair: Richard Portes (EUI, London Business School, and CEPR)

Lower for Longer? Neutral Rates in the United States
Andrea Pescatori (IMF) and Jarkko Turunen (IMF)

Discussant: Stefano Neri (Bank of Italy)

The Equilibrium Real Funds Rate: Past, Present and Future
James Hamilton (University of California at San Diego and NBER), Ethan Harris (Bank of America Merrill Lynch), Jan Hatzius (Goldman Sachs) and Kenneth West (University of Wisconsin and NBER)

Discussant: Evi Pappa (EUI and CEPR)

Session 5: Demographics

Chair: Antonio Ciccone (University of Mannheim and CEPR)

Demographics and the Behavior of Interest Rates
Carlo Favero (IGIER, Università Bocconi, and CEPR), Arie Gozluklu (University of Warwick), and Haoxi Yang (Università Bocconi)

Discussant: Michele Lenza (ECB)

Demographic Dynamics and Long‐Run Development: Perspectives for the Secular Stagnation Debate
Uwe Sunde (University of Munich), Matteo Cervellati (University of Bologna) and Klaus F. Zimmermann (IZA Bonn University and CEPR)

Discussant: Raquel Fernández (NYU and CEPR) ! Discussion

Chair: Evi Pappa (EUI)

Liquidity Traps and Capital Flows
Sushant Acharya (Federal Reserve Bank of New York) and Julien Bengui (Université de Montréal)
Discussant: Gregory Thwaites (Bank of England)

Stagnation Traps
Gianluca Benigno (London School of Economics, CEPR, and Centre for Macroeconomics) and Luca Fornaro (CREI, Universitat Pompeu Fabra, Barcelona GSE and CEPR)
Discussant:Philippe Aghion (Harvard University)

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