vice president and the director of research at the Federal Reserve Bank of Philadelphia.

for many useful comments and suggestions. The views expressed in this article are not necessarily those of the Federal Reserve. Monetary Policy and the New Normal Is the economy in for a prolonged spell of slow growth, as some believe, or a burst of innovation and productivity? In either event, policymakers must pay close attention to productivity trends. BY MICHAEL DOTSEY There is growing debate regarding whether the U.S. economy has entered a period of long-run, or secular, stagnation. The Great Recession has certainly increased interest in that discussion. While the onset of the stagna-tion is said to predate the Great Recession by 35 years, labor productivity has slowed further since 2010. History shows that recessions, even the Great Depression, hav