Lars P. Syll — The Bernanke-Summers imbroglio

As no one interested in macroeconomics has failed to notice, Ben Bernanke is having a debate with Larry Summers on what’s behind the slow recovery of growth rates since the financial crisis of 2007.

To Bernanke it’s basically a question of a savings glut.

To Summers it’s basically a question of a secular decline in the level of investment.
To me the debate is actually a non-starter, since they both rely on a loanable funds theory and a Wicksellian notion of a “natural” rate of interest — ideas that have been known to be dead wrong for at least 80 years …

Lars P. Syll’s Blog
The Bernanke-Summers imbroglio
Lars P. Syll | Professor, Malmo University

Ramanan — Disappointing Start, Mr. Bernanke

Keynes v. Wicksell. Ben sides with Knut instead of Maynard.

Brief articulation of Wicksell's natural rate of interest and Keynes's realization that there is a natural rate of interest for every level of employment. There is therefore no necessity for equilibrium at full employment "in the long run" based on a Wicksellian "natural rate." 

Multiple equilibria at less than full employment are both possible theoretically and probable based on history. No liquidity traps required. Chronic unemployment is a bug in the system that can be squashed using fiscal policy.

The Case for Concerted Action
Disappointing Start, Mr. Bernanke

Ramanan