most models assume that the economy will quickly bounce back from any shock, no matter how big. But suppose there's a shock so big that even what seems like a lot of stimulus isn't enough to bring back growth? Then these models will confuse a depression for a fall in growth potential. In other words
most models assume that the economy will quickly bounce back from any shock, no matter how big. But suppose there's a shock so big that even what seems like a lot of stimulus isn't enough to bring back growth? Then these models will confuse a depression for a fall in growth potential. In other words
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Did the financial crisis make us permanently poorer?
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