Commentary: after the fall
A. Introduction Let me thank the organizers of this conference for the invitation to come to this beautiful place and to attend what is always an intellectually challenging conference. In fact, the challenges today are not just intellectual, but they also have enormously important practical implications. How can we restore growth, and how can we do so in a sustainable way? This paper by Carmen and Vince Reinhart is essentially a paper about facts, assuming of course that historical data is more or less factually correct. Someone once said that facts can be awkward things, indeed even ugly things, but they can also be useful things—and that applies whether you prefer the use of inductive or deductive methods , or even some healthy mixture of both. Keynes famously addressed the awkwardness of facts when he replied to a journalist, " When the facts change, I change my mind. What do you do, sir? " Both Keynes and Hayek began their analysis of the 1930s with the observation of a simple fact: Deep slumps are possible, and the evidence presented in this paper further confirms that fact. The awkward thing is that much of modern macro theory seems to deny this possibility. New Keynesian and New