Robert Lucas on Depression era policies and current financial crisis
14 Dec 2014 Leave a comment
in global financial crisis (GFC), great depression, great recession, macroeconomics, Robert E. Lucas Tags: great depression, great recession, Robert Lucas
Does inequality lead to a financial crisis? | VOX, CEPR’s Policy Portal
13 Dec 2014 Leave a comment
in business cycles, economic growth, global financial crisis (GFC), great recession, macroeconomics Tags: GFC, top 1%
Figure 1. Change in loans versus changes in top 1% income shares, 14 countries, 1972–2008
via Does inequality lead to a financial crisis? | VOX, CEPR’s Policy Portal.
The Grumpy Economist: What’s wrong with macro?
06 Dec 2014 Leave a comment
in business cycles, fiscal policy, global financial crisis (GFC), great recession, macroeconomics, monetary economics, politics - USA Tags: Macroeconomics
Explicit and implicit marginal tax rate increases in the past seventy years in the USA
03 Dec 2014 Leave a comment
in business cycles, great recession, job search and matching, labour supply, macroeconomics Tags: Casey Mulligan, great recession, taxation and the labour supply
Economic policy uncertainty in the European Union
01 Dec 2014 1 Comment
in Euro crisis, global financial crisis (GFC), great recession, macroeconomics Tags: euro crisis, regime uncertainty
Source: Nicholas Bloom (2014) – all data at www.policyuncertainty.com. Data normalized to 100 prior to 2010.
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Economic policy uncertainty in the USA
01 Dec 2014 Leave a comment
in business cycles, global financial crisis (GFC), great recession, macroeconomics, politics - USA Tags: great recession, Nicholas Bloom, regime uncertainty
Source: Nicholas Bloom (2014) – all data at www.policyuncertainty.com. Data normalized to 100 prior to 2010.
Avoiding Lost Decades: European Edition | Econbrowser
29 Nov 2014 Leave a comment
in economic growth, Euro crisis, global financial crisis (GFC), great recession, macroeconomics Tags: euro crisis, Euroland
US corporate earnings vs. European corporate earnings
19 Nov 2014 Leave a comment
in Euro crisis, great recession, macroeconomics, politics - USA Tags: Euroland, GFC, great recession
The great stagnation continues
19 Nov 2014 Leave a comment
in global financial crisis (GFC), great recession, politics - USA Tags: GFC, Great Deviation, The Great Recession
Operations Research and The Revolution in Aggregate Economics – Edward Prescott 2012
18 Nov 2014 Leave a comment
in applied welfare economics, business cycles, economic growth, fiscal policy, global financial crisis (GFC), great depression, great recession, macroeconomics Tags: Edward Prescott, real business cycle theory
The extension of recursive methods to dynamic equilibrium modelling spawned a revolution in aggregate economics.
This revolution has resulted in aggregate economics becoming, like physics, a hard science and not exercises in storytelling.
Operations research played a major role in the development of practical methods to model dynamic aggregate economic phenomena and to predict the consequences of policy regimes.
Subsequently recursive methods were used to develop a quantitative theory of aggregate fluctuations and other aggregate phenomena.
Real GDP per New Zealander and Australian aged 15-64, PPP, 1956-2013, $US
18 Nov 2014 1 Comment
in business cycles, economic growth, geography, global financial crisis (GFC), great recession, macroeconomics, politics - Australia, politics - New Zealand Tags: lost decades, prosperity and depression
Figure 1: Real GDP per New Zealander and Australian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1956-2013, $US
Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics
Figure 1 shows that New Zealand lost two decades of growth between 1974 and 1992 after level pegging with Australia for the preceding two decades.
New Zealand returned to trend growth between 1992 and 2007. New Zealand did not make up the lost growth of the previous two decades to catch up to Australia.
Figure 2: Real GDP per New Zealander and Australian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1.9 per cent detrended, base 100 = 1974, 1956-2013, $US
Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics
In Figure 2, a flat line equates to a 1.9% GDP annual growth rate; a falling line is a below trend growth rate; a rising line is an above 1.9% growth rate.
Figure 2 shows that there was a 34% drop against trend between 1974 and 1992; a return to trend growth and slightly better between 1992 and 2007; and then a recession to 2010.
Australia had its ups and downs since 1956 but essentially grew at the trend growth rate of 1.85% since 1970. The so-called resources boom in Australia does not show up in Figures 1 or 2.
There was no growth rebound in New Zealand to recover the lost ground, either in the lost decades between 1974 and 1992, or after the Global Financial Crisis. The strong GDP growth in Australia after that Keating recession in 1991 is an example of the country recovering lost ground after a recession – See Figure 2.
A trend growth rate of 1.9% is the 20th century trend growth rate that Edward Prescott currently estimates for the global industrial leader, which is the United States of America.
Utopia, you are standing in it! 
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