6 Only a healthy financial system is able to provide funding for good projects that spur productivity and innovation. 7 The lesson from past history is that dealing with the legacy of accumulated imbalances is not simply a duty to be fulfilled after the economic recovery, but rather an important precondition for sustaining a durable recovery.
The primary macroeconomic challenge for the next 10 years is to ensure that they do not turn into another “lost decade”. This lesson is consistent with economic theory and evidence. Since the time of Irving Fisher, economists have explored the impact of a legacy of indebtedness for growth.