Thursday, September 8, 2011

Why doesn't the stimulus show up in this plot?



Something is not making sense.  The ER Ratio hit 58.5% and stayed there.  Between the 2008 crash and late 2009 we mainly just adjusted ER Ratio down, maybe adding a slight bend in the employment crash, but not much else. Are the Keynesians claiming that the equilibrium rate would have been lower?  I don't think so, their math doesn't support that conclusion.

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