Scott Sumner on The Great Stagnation
By David Henderson
In other words, most economists now see the US trend rate of RGDP [real GDP] growth as being something like 1.5%. After 150 years of 3% trend, that’s a startling downshift. Tyler Cowen is no longer a contrarian; The Great Stagnation is now conventional wisdom.
The last sentence would be close to accurate if the only thing that Tyler said in The Great Stagnation is that there is a great stagnation. [Why “close to accurate” as opposed to just “accurate?” Because 1.5% growth is better than stagnation in an economy whose population is growing by less than 1.5%. But that’s a minor quibble.]
But Tyler said more than that. He gave three reasons for the great stagnation and in my review of the book [scroll down], I showed why all three were faulty. My impression, after reading the various reviews of Tyler’s book, is that I’m the only one who carefully considered all three of his reasons. Virtually everyone else focused on whether there is a stagnation and not on whether Tyler’s reasoning for the alleged stagnation made sense.