In December , one of the most eminent economists of the time, Alvin E. Hansen, delivered the Presidential Address, titled “Economic. Summers’ theory of “secular stagnation” (a term first used by the economist Alvin Hansen back in ) holds that, in the United States, the. Recently, Hansen’s secular stagnation hypothesis has gained renewed stagnation in the US in much the same way as suggested by Alvin Hansen in

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Upon completion of the coursework for the PhD in Hansen served on several government advisory posts, e. Adams Arthur T. Farnam Frank A. These days the words secular stagnation and Japan seem to always go together. Williams Harold A. I don’t want to make too much of this now, but consider my post herein particular, the passage by Richard Rogerson related to this issue.

If households have more money to spend and they spend it on Ford cars, what is that a problem for the Ford Motor Company?

I am increasingly impressed with the analysis made by Wicksell who stressed the prospective rate of profit on new investment as the active, dominant, and controlling factor, and who viewed the rate of interest as a passive stagnahion, lagging behind the profit rate.

May I enquire why? Hansen’s advocacy with Luther Gulick during World War II of Keynesian policies to promote post-war full employment helped persuade Keynes to assist in the development of plans for the international economy.

Some people might say it is way off the mark, but you can see elements of Fisher’s Theory of the Rate Interest in Keynes’s liquidity preference theory. Looking at the economy of the late s, Hansen wrote: I think of Keynes as an explanation hanswn depressed levelsunrelated to growth phenomena. Hansen, in his review of The General Theory of Employment, Interest and Moneywas skeptical of John Maynard Keynes ‘s propositions, but by Decemberin his presidential address to the American Economic Associationhe embraced Keynesian theories of the need for government intervention in periods of economic recession.


Retrieved from ” https: Hollander Henry R. He could see the stagnation of investment and the inability of capitalism to bring the required level of investment forth.

However, Hansen did not exactly offer a prognostication–his theory is better thought of like any theory as a conditional forecast. Views Read Edit View history. Flynnfor example, argued that Hansen’s policies were de facto fascism, sharing alarming similarities with the economic policy of Benito Mussolinithe dictator of Hansenn.

Adams Fred M. But such new developments are not currently available in adequate volume By using this site, you agree to the Terms of Use and Privacy Policy.

CONVERSABLE ECONOMIST: Secular Stagnation: Back to Alvin Hansen

He was elected as a Fellow of the American Statistical Association in The s boom was a consumer and an investment boom. Posted by Timothy Taylor at 6: The theory Hansen espouses seems to relate the level of employment say, as measured by the employment-to-population ratio or the unemployment rate to the rate of economic growth.

Roberston for this view, but it is also a recurring theme in Schumpeter’s work see my earlier post relating Schumpeterian growth to secular stagnation. The thesis was highly controversial, as critics, such as George Terborgh, attacked Hansen as a “pessimist” and a “defeatist. The phrase secular stagnation was first introduced by Alvin Hansen in a speech he prepared for the AEA meetings in He also advocated fiscal and other stimuli to ward off the stagnation that he thought was endemic to mature, industrialized economies.

But there is equally no basis for the assumption that we can take for granted the rapid emergence of new industries as rich stagntaion investment opportunities as the railroad, or more recently the automobile, together with all the related developments, including the construction of public roads, to which it gave rise.

Subsequently, his Business Cycle Theory and his introductory text Principles of Economicswith Frederic Garver brought him to the attention of the wider economics profession. But what parts of that do you actually disagree with, if you don’t mind me asking? Gardner Herbert J. And there was the ensuing slump. Further, Hansen was skeptical about whether either monetary or fiscal policy could provide a long-lasting answer.


If you haven’t read the speech, I recommend that you do–it’s an interesting and easy read.

Alvin Hansen

Business Cycles and National IncomeLondon: What sort of growth did Hansen have in mind? Associated with these developments stagnatioon a rapid growth in investment opportunities and capital spending. Mills Sumner Slichter Edwin G.

I venture to assert hanssn the role of the rate of interest as a determinant of investment has occupied a place stangation than it deserves in our thinking.

Davenport Jacob H. In the late s, Hansen argued that “secular stagnation” had set in so the American economy would never grow rapidly again because all the growth ingredients had played out, including technological innovation and population growth. Each of these in turn, severally and in combination, has opened investment outlets and caused a rapid growth of capital formation. Arthur Lewis Charles L. Earlier in the decade, the United States suffered a major economic contraction.

Heck, why not get the Government to fund proper, desirable skills training for the unemployed? This, I suggest, is more likely the cause of Japanese secular stagnation than spastic monetary policy. I would imagine Sevular himself would say and in fact he did say the development of the GT was eclectic.

But then, that’s the advantage from my view of having deliberate policy to maintain a percentage of the workforce unemployed, it means that those jobs that don’t require skills but are unpopular can still be filled at the lowest possible cost, since someone will be desperate enough to take it out of necessity!

D alvnwith a thesis on business cycles. Schultze Charles P. Bogart George E.