Very interesting. The "innovation" during low interest rate periods would still happen, but as you say would be a lesser kind of innovation, and with lasting pe

Very interesting. The "innovation" during low interest rate periods would still happen, but as you say would be a lesser kind of innovation, and with lasting persistent effects. This could explain the current divergence in the GDP per capita curve (usually log linear) if we follow the idea that a continuous pace of innovation is necessary. A quick wolframalpha graphing of the GDP per capita curve and federal funds rate shows in fact that the GDP per capita curve has inflections when interest rate quickly fall or go below 2.5%. But considering that interest rates are used by the fed to try and fix the economy and thus highly correlated with high and lows, I don't know if there is a good way to check for this hypothesis. It could also have bad consequences, since it predicts that countries with low interest rate (currently EU, US, JP) will experience a lesser form of innovation with lasting effects - and unfortunately I don't see interest rates going up, not with the current focus on low inflation. It still is a very interesting concept. I would like to know more. Is there a name for the model you are describing? (or some links)