Sunday, January 6, 2013

We'd rather be in San Diego

If we were, we'd remind Prof. DeLong that we were trying to point this out to him years ago (and he resisted hearing to the extent of deleting the argument almost any time it was made);
Between 1985 and 2007--the period of the "Great Moderation"--the Federal Reserve and the rest of the U.S. government on the west edge and the central banks and institutions of the European Union on the east edge of the Atlantic Ocean provided a broadly stable macroeconomic environment within which private-sector businesses, workers and investors could make their economic plans. In the U.S., on an annual basis: the rate of nominal GDP growth dropped below 4% for only 3 of those years and rose above 7% for only 2 of those 22 years; the rate of consumer price inflation rose above 5% for only 3 and fell below 2% percent for only 2 of those 22 years; and the civilian adult employment-to-population ratio remained between 60% and 64% for that entire period. And Western Europe experienced a similar "Great Moderation" with low inflation, relatively smooth growth, and diminishing unemployment.
If we could be at the conference we'd certainly correct that '1985' to a more accurate, 'from the very end of 1982'.  Which makes it a tidy quarter of a century (the very end of 2007) of near economic bliss.

Better late than never.

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