Sunday, September 30, 2012

Market Monetarist Diagrams

The traditional Market Monetarist three:

Nominal GDP:

Real GDP:


Keep on telling yourself that this just means that people decided they didn't feel like working as much starting in 2008, so production fell, and so did spending on output.

And what about prices and wages?

and wages:

And now for some new diagrams.   Nominal GDP divided by wages (hourly x 2000)

And since there is this odd notion that a sudden increase in productivity has caused lower employment, here is real GDP per worker:

This last diagram looks more consistent with the view that potential output has fallen a bit  rather than the notion that we are so much more productive that we don't need as many workers.   (Which I think is pretty much inconsistent with fundamental economic principles like scarcity and opportunity cost and instead entirely consistent with naive noneconomists views about the fundamental scarcity of jobs.)

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