A New Paradigm for the Business Cycle - II

Apropos #IMF Working Paper 17/250, which argues 4 a #NewParadigm for the #BusinessCycle, where crises can permanently reduce output (both level and growth rate), here's US #RGDP growth rates 4 each #NBER !#BusinessCycle since 1948 [from the 2018 Economic Report of the President] pic.twitter.com/CdGGQ7npv5

— Satyen Baindur (@Satyen_Baindur) March 23, 2018

US Goods and Services Trade Balance by Country (major trading partners) - the US has a Services trade *Surplus* with all, including #China, with the largest being with the #EU), but the goods trade deficit with #China dwarfs everything else.... pic.twitter.com/xELYV8eoXX

— Satyen Baindur (@Satyen_Baindur) March 23, 2018

New study shows that all types of recessions, including those arising from external shocks, lead to permanent losses in output and welfare. https://t.co/dYdl03J1DS #IMFBlog pic.twitter.com/lNydqYLU1u

— IMF (@IMFNews) March 24, 2018

A New Paradigm for the Business Cycle?

#IMF Working Paper 17/250 argues 4 a #NewParadigm of the '#BusinessCycle'- the #OutputGap can be 'ill-conceived, poorly-measured & inconsistent over time' - output losses can in fact be permanent, depressing both trend and level, w only partial recovery.....via @sdonnan pic.twitter.com/K516WSZQyq

— Satyen Baindur (@Satyen_Baindur) March 21, 2018

The #ParadigmShift upsets #ConventionalWisdom: Since financial crises cause #GrowthRecessions, strong #FinancialRegulation can b pro-#Growth; & #Fiscal #conservatism b4, during & after crises (even if not #austerity) is advisable, 2 decrease chance of high future sovereign debt..

— Satyen Baindur (@Satyen_Baindur) March 22, 2018

And 4 #Monetary policy, the new paradigm argues in favor of making #FinancialStability an explicit part of the mandate, to the extent of #LeaningAgainstTheWind, and even accepting higher inflation & output volatility as a means of decreasing the risk of future #FinancialCrisis...

— Satyen Baindur (@Satyen_Baindur) March 22, 2018

Apropos #IMF Working Paper 17/250, which argues 4 a #NewParadigm for the #BusinessCycle, where crises can permanently reduce output (both level and growth rate), here's US #RGDP growth rates 4 each #NBER !#BusinessCycle since 1948 [from the 2018 Economic Report of the President] pic.twitter.com/CdGGQ7npv5

— Satyen Baindur (@Satyen_Baindur) March 23, 2018