Jackson Hole was abuzz last week as top economists rubbed shoulders with central bankers, but the stuffed bears in the lobby of the venue seemed symbolic of the angst permeating world markets.
In spite of this, the participants got down to business and I was not alone in thinking that today’s financial market turmoil and the anxiety over high unemployment in the United States and over European debt should be treated by the economics profession as an opportunity to think differently about solutions for kick-starting growth.
Today’s uncertainty should spur policymakers to take new economic ideas and build a social consensus for action. An ambitious, innovative approach is needed otherwise the crisis will likely be with us for some years. Indeed, the US and EU could face a Japan-style scenario, with prolonged recession and a high level of public debt.