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Tags: Summers | structural | reform | economy

Harvard's Larry Summers: 'Structural Reform Essential' for Economy

By    |   Monday, 08 September 2014 12:59 PM

For almost a year, Harvard economist Larry Summers has argued the economy is caught in the grip of "secular stagnation," which entails weak demand and frequent asset bubbles.

"The economy continues to operate way below any estimate of its potential made before the onset of financial crisis in 2007," he writes in the Financial Times.

"The average growth rate of the economy of less than 2 percent since that time has caused output to fall further and further below previous estimates of its potential."

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So how do we reverse that trend?

"Structural reform is essential to increase the productivity of both workers and capital, and to increase growth in the number of people able and willing to work productively," says the former Treasury secretary.

That includes increased infrastructure investment, immigration reform, policies that promote family-friendly work, support for energy production and business tax reform.

CNBC contributor Ron Insana is concerned about the economy too. The current global economic climate shares a lot in common with the years leading up to World War II, he says.

"Like today, in 1937, the U.S. and the rest of the world were five years removed from the first leg of the Great Depression and beginning to find renewed confidence in the pace of global economic growth, or, in some cases, ignore instances in which economic activity left something to be desired," Insana writes in a commentary for CNBC.

"The combination of tighter monetary and fiscal policies [that resulted] proved ruinous, both at home and abroad." Insana is now more worried about Europe, Japan, and China than the U.S.

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Finance
For almost a year, Harvard economist Larry Summers has argued the economy is caught in the grip of "secular stagnation," which entails weak demand and frequent asset bubbles.
Summers, structural, reform, economy
308
2014-59-08
Monday, 08 September 2014 12:59 PM
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