frameworkContact

A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

News

 

Published Paper: Cyclical Misconceptions Driving Policy Mistakes


Download the paper by clicking here.

Key to the “productivity puzzle” – the downshift in productivity growth following the Great Recession – is the persistence of policies rooted in overly optimistic assumptions about trend growth, and mistaken notions about business cycle dynamics. Indeed, a review of the various factors underlying the productivity growth slump does not support the longstanding consensus assuming that a rebound in productivity is around the corner.

Confused by their inability to distinguish between structural and cyclical forces, policymakers launched Grand Experiments in the wake of the Global Financial Crisis that could do nothing to address a structural problem, and this has left them out of ammunition. In anticipation of a fresh recessionary shock, many are now advocating massive fiscal stimulus.

In light of our investigations, the lesson to be learned from failed policy experiments is that, no matter the proposed policy, it should be subject to a litmus test. Ultimately, only policies that genuinely address the challenges of demographics and productivity have a chance to succeed.

Challenge, 59(4):327–344, 2016,

ISSN: 0577-5132 print/1558-1489 online

Related News & Events

Disentangling Cyclical from Structural

ECRI January 17, 2017

Hong Kong presentation slides and notes. More

 

26th Annual Hyman P. Minsky Conference

Levy Economics Institute April 18, 2017

On April 18, Lakshman Achuthan will present at the Levy Institute's 26th Annual Minsky Conference.

 

Interview on Fed Models, and an Esoteric Long Leading Index

Bloomberg September 19, 2016

More detail on ECRI’s growth rate cycles, and the global outlook. More

 

Cyclical Long-Term Slowdown In U.S. Growth But No Recession

Seeking Alpha September 12, 2016

Recall that in early 2016, when many were afraid of recession, ECRI declared that such fears were premature. More