Economic impossibilities for our grandchildren?
by Kevin Hjortshøj O'Rourke
- 04 Apr 2016
Full text posted to Journal of the British Academy, volume 4, pp. 21-51.
Abstract: The paper looks at the development of the secular stagnation thesis, according to which insufficient investment demand could lead to unemployment being a problem in the long run. It does so in the context of the economic history of the time. It explores some 19th-century antecedents of the thesis, before turning to its interwar development. Not only Alvin Hansen, but Keynes and Hicks were involved in the conversations that led to Hansen’s eventual statement of the thesis that economists are familiar with today. The argument made sense in the context of the interwar period, but more so in Britain than the US. The paper concludes by looking briefly at the relevance of the thesis for today.
Keywords: secular stagnation, economic history, Keynes, Alvin Hansen, interwar.