How the Great Moderation Became a (Contained) Depression and What to Do About It

Barry Cynamon, Steven Fazzari and Mark Setterfield

No 1303, Working Papers from Trinity College, Department of Economics

Abstract: The Great Recession was deep and the subsequent recovery has been slower than most economists predicted. This article summarizes the message of a recent book that presents perspectives from a group of Keynesian economists who warned prior to 2007 of dangerous trends that could lead to these unfavorable outcomes. We discuss how the debt-fueled consumer boom leading up to the Great Recession was unsustainable and how rising inequality has compromised demand generation during the feeble recovery. We conclude the article by considering how public policy must respond in coming years.

Keywords: Great Recession; Great Moderation; economic recovery; Keynesian macroeconomics (search for similar items in EconPapers)
JEL-codes: E21 E25 E61 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2013-02
New Economics Papers: this item is included in nep-hpe, nep-mac and nep-pke
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Citations: View citations in EconPapers (3)

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http://www3.trincoll.edu/repec/WorkingPapers2013/WP13-03.pdf First version, 2013 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tri:wpaper:1303

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