Nick Rowe brings up an important issue and sends a warning. He says that New Keynesian economists are assuming full-employment. And it is foolish. Nick Rowe is correct. Keynes himself talked about how effective demand could stop output before full-employment is reached. The cause is deficient effective demand. And through the research that I do, […]
Tim Kane was nice enough to include my question in this year’s Hudson Survey of Leading Economics Bloggers (PDF). Here’s the question and the results: Judging based on post-war economic data, how do prosperous, high-GDP/capita countries compare with one another? Countries with larger government sectors have _____ growth rates compared to countries with smaller government sectors. As a group, […]
I’m seeing all types of comments on the 2013 rise in part time employment that blame it on Obama-care and that is just plain wrong. Based on unpublished BLS data so far this year federal employes forced to work part time because of the sequester account for over 100% of the increase in part time […]
From Steve Randy Waldman’s Interfluidity current post: Scott Sumner responds. Related — elsewhere: Tyler Cowen — Why are the high growth countries so often the high inflation countries? Kevin Erdmann — 1970s vs. 2000s: Gender Effect Edward Lambert — Has the Fed rate done a good job to balance inflation over the years? Edward Lambert […]
As I showed over the weekend, the jumps in inflation during the 1970’s were due to real GDP reaching the Long-run aggregate supply curve (LRAS). But underlying the inflation of the 1970’s were dynamics of growth, optimism, speculation, small business development, union bargaining power and a surging labor force from desirous baby-boomers coming of age […]
There’s great discussion out there on this topic, see Steve Randy Waldman’s links list here. Karl Smith gives us this graph and asks: I mean, honestly, would you look at the graph above and conclude that during the 1970s the economy dangerously overheated. I’d like to offer a perhaps more useful (though more complicated) look. […]
Some posts lately about the inflation of the 1970’s… Steve Randy Waldman, Steve Roth, Scott Sumner and me. Here is a graph of the inflation during the 1970’s… Link to graph #1.
In light of the recent discussions of inflation in the 1970’s (Steve Roth and Steve Randy Waldman), I ask… how well has the Federal Reserve done in setting a Fed rate to balance inflation over the years? Including the 1970’s… Actually very well, except for Volcker in the 1980’s. First, let me state that there […]
Steve Randy Waldman delivers another Aha! post (and a followup reply to Scott Sumner) pointing out a huge driver of the 1970s Great Inflation — the rise in the labor force: Between the mid 60s and the mid 70s, the labor force grew by 30%.*
It is good to look back at the 1980 recession and analyze what happened. First, the recession officially started in July of 1980. Be that as it may, the business cycle had already topped off in the 3rd quarter of 1978 when the economy hit the effective demand limit. Capacity utilization started falling the same […]