• Stagnation – temporary or a new normal?

    Stagnation – temporary or a new normal?1

    The global financial and economic crisis has exposed a chasm between the theory and the practice of policy. Not only did the models underpinning policy choices not help anticipate the crisis, but now arguably they cannot even help fight it. Concerns are rising in the policymaking field that something structural – that models cannot capture – has changed. The stagnation afflicting the global economy could hence be a new normal, from which we can escape only by thinking out of the box of deceptively comfortable models.