A stronger version of this argument applies if faced with a situation in which the equilibrium real rate is permanently lower.27 According to standard growth theory, the equilibrium real interest rate has some relation to long‐run productivity growth.
So this touches on the so‐called “secular stagnation” hypothesis recently reinvigorated by Gordon, Krugman, Summers and others.28 Indeed, there is evidence of declining productivity since the 70s. The issue is whether, and to what extent, the recent Great Recession and the resulting slow  ∆ 0.125 2 and ∗ 1 0.125 2 and commit to max ∗ , 25 Kiley and Roberts (2017).