Would Bigger Entitlements Fix the Economy?

One intriguing idea was buried in the middle of Kocherlakota's speech. He implied that a credible promise to make entitlement programs like Social Security and Medicare more generous in the future could lead to a faster economic recovery today. If you take Kocherlakota's reasoning seriously, this would obviate the need for a prolonged period of low real interest rates and the associated bubble-bust cycles.

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