The Natural Rate of Unemployment, Potential Output and Current GDP Trends

.@ojblanchard1 @piie asks if #MiltonFriedman’s #NaturalRate hypothesis (of #Unemployment /#PotentialOutput) still holds up. @LHsummers: 'Any reasonable reader of the data’ would see that post#GFC trend US & EU #PotentialOutput (instead) confirms #Hysteresis doctrine (Phelps 1972) pic.twitter.com/CHZRADsJwe

— Satyen Baindur (@Satyen_Baindur) May 11, 2018

‘Macroeconomic evidence suggests *persistent effects* of monetary policy on natural unemployment rate & potential output; most persuasive microeconomic channel: high unemployment → lower worker morale/skills, ↓ LFPR, thus persistent ↓ potential output’ https://t.co/HgLem0IHpR

— Satyen Baindur (@Satyen_Baindur) May 11, 2018

.@ojblanchard1: ‘I believe that there is a strong (though not overwhelming) case, to allow US output to exceed potential for some time, so as to reintegrate some of the workers who left the labor force during the last ten years.’

— Satyen Baindur (@Satyen_Baindur) May 11, 2018

Can the Chinese Savings Rate be Explained by Demographics Alone?

#IMF Blog on #China Savings: first, it's not just Households alone, [although (Household Savings)/GDP, top curve in figure below, differs most from the global average]; Corporate and Government savings are high too... (reference Country Report cr17248) pic.twitter.com/58VhZ0cOJk

— Satyen Baindur (@Satyen_Baindur) February 27, 2018

#IMF Blog #China Savings: high savings resulted in both Internal and External imbalances - which have rotated - as (Current Account/GDP) surplus; external imbalance has fallen, the internal imbalance (high) Investment/GDP has risen, though since 2014 beginning to fall... pic.twitter.com/NwT6sioULb

— Satyen Baindur (@Satyen_Baindur) February 27, 2018

#IMF #China: #OverlappingGenerations model w income & interest rates constant able 2 explain ~half the increased Savings 4m #Demographics alone i.e. #OneChild #ageingpopulation #PrecautionarySaving, ↓ #SocialSafetyNet; & w inc & int dynamics can explain all post-2000 increase. pic.twitter.com/iMlu8iIjoc

— Satyen Baindur (@Satyen_Baindur) February 27, 2018