What is the difference in character from these pictures?
Larry Summers wrote a post yesterday about the hollowing out of the middle class and how that has lowered consumption and led to secular stagnation. He says that this effect must be taken into account for policy. Well I sit here after 4 years of building models of Effective Demand using labor share… My models […]
I posted this graph yesterday which has 234 data points from 1954 to 2016… The graph implies that as profit rates come easier over the nominal cost of money the percentage of gross private investment to GDP tends downward. I tweeted this graph to Miles Kimball who is in favor of negative nominal rates. Negative […]
Stan Fischer: “I think we’d be better off if there was a price for using money, or for not investing, in terms of monetary returns” — Matthew B (@boes_) September 27, 2016 Data link… Red circle is 2nd quarter 2016.
I have posted this model of core inflation before. Core inflation on y-axis. Corporate-after-tax profit rate minus nominal rates on x-axis. The model implies that inflation depends upon the difference between an aggregate corporate profit rate and nominal rates. The more nominal rates cut into corporate profit rates, the more corporations would choose to raise […]
Here is a graph from FRED showing monthly percentage movements of core inflation. (link to data) There used to be ranges that core inflation moved within. The monthly change either hit the maximum of that range or the minimum with some breakout movements in between. Monthly movements made sense by looking at 12-month moving averages. […]
At a time in history when inequality is growing and immigrants are being shunned, I offer the story of Pedro Opeka… He is an Argentinian priest working in Madagascar.
I have posted this graph before. Here is updated data. The graph plots labor share (left) against the unemployment rate (bottom) since 1948 to 2ndQ 2016. (data at FRED) The data points suggest a labor supply limit shown by the down-sloping red line. As labor share drops, unemployment tends to bottom out at higher levels. […]
Which of these models would you trust to evaluate inflation? (quarterly data since 1957) Phillip’s curve… core inflation plotted against unemployment. (link) My model plotting core inflation against corporate profit rates minus a mix of short & long-term nominal rates… (link) Who in their right mind would still talk about the Phillip’s curve after seeing […]
The Phillip’s curve is obsolete. Inflation does not reliably depend on employment. So what other model could we depend on? This one showing core inflation plotted against an aggregate corporate profit rate minus a mix of nominal rates. (FRED data link) Mixed nominal rate = 0.56*Fed rate + 0.44*10-year treasury Here we have quarterly data […]