What's with the US budget and recession stuff?

[Ben Kenobi]

Is economics not required in Canadian high schools?

Actually, not it's not.

Well, going over my degree.

I have 38 credit hours of history. 30 credit hours of arts electives (12 of English, 12 of philosophy, 6 in economics), 52 in science requirements (24 in physics, 18 in math, 6 in chem, 6 in computer science).

So that's in order:

(38 history, 24 physics, 18 math, 12 english, 12 philsophy, 6 economics, 6 chemistry, 6 computer science)

[KrazyHorse]

Back of the envelope calculations based on market data circa qe2 imply that each additional percentage point of integrated inflation buys us 1.7 percentage points of integrated nominal activity, or 0.7 percentage points of real activity.

[Ben Kenobi]

Back of the envelope calculations based on market data circa qe2 imply that each additional percentage point of integrated inflation buys us 1.7 percentage points of integrated nominal activity, or 0.7 percentage points of real activity.

So why not have 200 percent inflation? We'd have 100 percent real growth?

Free lunch people!

Say the economy is at -5 percent growth.

That would mean that 7 percent inflation would procure no nominal growth.

To get 3 percent growth, you'd need, 11.5 percent inflation. Yow.

[KrazyHorse]

Looked at another way, realized core inflation has integrated to ~4.5% below trend over the last three years, costing the us ~2.5-3% of real activity. These two factors explain the vast majority of subtrend gdo. The other 25% could easily be real factors. Note that some real factors are a direct result of the recession (such as supply-reducing increase in unemployment benefits and increases in expected future taxes to pay for fiscal "stimulus"

Edit: numbers tweaked.

[KrazyHorse]

So why not have 200 percent inflation? We'd have 100 percent real growth?

Free lunch people!

Because the as curve is not linear, you moron.

[giblets]

So why not have 200 percent inflation? We'd have 100 percent real growth?

Free lunch people!

I don't think Krazyhorse claimed a linear relationship between nominal and real GDP exists. edit: crosspost.

[KrazyHorse]

Under a simplified model, the slope of the as curve goes to infinity at trend ad.

[Ben Kenobi]

Because the as curve is not linear, you moron.

So then your argument that 1.0 points of inflation procures 1.7 in nominal growth and 0.7 in real growth when inflation is at 0?

Or some different number?

That's kind of an important number KH, if the curve is not linear.

Under a simplified model, the slope of the as curve goes to infinity at trend .

So where's the cross point? At what point does the stimulus stop stimulating?

[KrazyHorse]

So then your argument that 1.0 points of inflation procures 1.7 in nominal growth and 0.7 in real growth when inflation is at 0?

Or some different number?

That's kind of an important number KH, if the curve is not linear.



So where's the cross point? At what point does the stimulus stop stimulating?

No, you idiot, the data shows that relationship UNDER CURRENT CONDITIONS, NOT AT 0 INFLATION.

And as I stated, the as curve is generally expected to slope to infinity at trend aggregate demand.

[KrazyHorse]

The wonderful thing about market data is that you don't have to worry about policy lags in measuring effectiveness...

[Ben Kenobi]

And as I stated, the as curve is generally expected to slope to infinity at trend aggregate demand.

So where does it cross, KH?

[KrazyHorse]

If you understood what the as curve was you would know I've already answered that question.

[Ben Kenobi]

All you've said is that it's got a curve that goes to infinity.

I'm asking you, at what point does the curve cross where the increase in interest adds less to the economy?

This is my point, and the fact that you still haven't answered the question with a specific interest rate piques my curiousity.

Why so coy, KH?

[KrazyHorse]

All you've said is that it's got a curve that goes to infinity.

I'm asking you, at what point does the curve cross where the increase in interest adds less to the economy?

No, you stupid ****, what you asked was where "the stimulus stopped stimulating" This is the point at which all increase in ngdp is due to inflation, and none due to real growth. The as curve is a plot of real output vs the price level, thus its slope goes to infinity at precisely this point.

You ignorant twit, stop offering your utterly uninformed opinions on this.

[Dinner]

If you understood what the as curve was you would know I've already answered that question.

You were responding to Ben but am I correct that the AS curve is the aggregate supply curve while the AD trend is the trend line for aggregate demand? In other words we're talking about a supply and demand curve? If not please explain because I am unfamiliar with the terms you are using.

Edit: This post was helpful:

No, you stupid ****, what you asked was where "the stimulus stopped stimulating" This is the point at which all increase in ngdp is due to inflation, and none due to real growth. The as curve is a plot of real output vs the price level, thus its slope goes to infinity at precisely this point.

So the two axis of the graph are what exactly, supply & demand? I honestly don't know. The curve represents the ratio of nominal GDP growth to real gdp growth and the point in which the ratio between ngdp growth vs rgdp growth is 0 would be the point where additional stimulus would not generate any additional real economic activity and instead would just add to inflation. Correct?