and Summary -- I. A re-examination of the state of growth and stabilization theories -- 1. Second Thoughts on Growth Theory -- 2. The State of Macroeconomics -- 3. The Rich Country-Poor Country Problem: From the Eighteenth to the Twenty-First Centuries -- II. Innovations in financial markets and...

We propose a theoretical framework to reconcile episodes of V-shaped and L-shaped recovery, en- compassing the behaviour of the U.S. economy before and after the Great Recession. In a DSGE model with endogenous growth, negative demand shocks destroy productive capacity, moving GDP to a lower...