After having been considered to head of both the Federal Reserve and the Bank of Israel earlier this years, Lawrence Summers has been propelled back into the center of the broader economic dialogue with a speech at a recent IMF Economic Forum. Essentially his argument is deceivingly simple and straight forward. The natural or neutral interest rate, which is needed to achieve full employment is below zero. Given the relationship between labor force growth and the natural rate of interest, the demographic outlook suggests that negative interest rates may be necessary for a prolonged period. Moreover, for the past ... (full story)