.@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
