The Peterson Institute hosted a “Rethinking Macroeconomic Policy Conference” on October 12–13, 2017. In one session, Olivier Blanchard and Lawrence H. Summers discuss what economists have learned since the financial crises about economic shocks and their aftermath.

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Paul Krake
Paul Krake


Short and succinct, the piece primarily features Olivier Blanchard who is a brilliant economic mind. His paper, "Back to Future" is worth a look. Main takeaways: 1) the notion that the financial system is self adjusting / stabilizing is flawed. 2) Policy makers must be more focused on the financial system as a source of stress. 3) inflation targets may to too low as we may not give ourselves enough cushions when recessions / crisis reappear because nominal yields are kept too low. The last six recessions have seen rates rise around 500bps. Under the current framework, this looks highly unlikely during this cycle.