America's Sluggish Recovery: HHST also open up a new front in an important conceptual debate about the sluggishness of the recovery:
The Obama administration says that the economy’s awful performance reflects the reality of the aftermath of a financial crisis and that the administration’s policies generated what little recovery we have seen from the severe 2007-2009 recession – Americans should stay the course. But the historical record is clear: Our economy usually recovers quickly from recessions, and the more severe the recession, the faster the subsequent catch-up growth.
An interesting piece of background here is that back in March 2009 it was the Obama administration saying we should expect rapid catch-up growth, and Mankiw arguing that this is an unfounded assumption. The Obama administration really has changed its tune on this "unit root" controversy, and it's interesting that Mankiw has also changed his mind. Normally the problem in intellectual life is that people hesitate to confess to error even when refuted by events. Changing your mind after having been apparently vindicated by events requires a staggering level of open-mindedness.