Models
2009-12-04 · Original WordPress address
The problem with most stories is that they're just words. With just words its easy to sound like you're making sense, that the one thing you said leads to the other. For example, Ryan Avant says we need more stimulus and so does Scott Sumner (e.g. ?).
So, we have increasing inflation and GDP. Understanding the limited ability of policy makers to fine tune the economy, what model under conditions of increasing inflation and increasing GDP recommends more stimulus?
Speaking of which, I'm embarrassed to say that I have no idea why unemployment is a lagging indicator, but I do know that it has been so for a long time. This means high (but decreasing?) unemployment isn't necessarily an indicator of insufficient aggregate demand.