tag:blogger.com,1999:blog-5501578761718800303.post4768634650843774879..comments2022-05-16T05:54:36.039-04:00Comments on Talking Points, Meta: The Tragedy of Living in the Presentrapier7http://www.blogger.com/profile/07734542594754572266noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5501578761718800303.post-14531295909858100372013-01-20T05:23:15.798-05:002013-01-20T05:23:15.798-05:00From what I can tell your argument seems to be tha...From what I can tell your argument seems to be that we suffered a big wealth shock which reduced output and employment. However, you can't reason from a wealth change because wealth shocks on their own don't cause recessions, it's the driving forces behind them which (sometimes) reduce output.<br /><br />Ex:<br /><br />1) 1987 market crash. Huge wealth shock which had no effect on employment and output. Central bank kept NGDP chugging at its 5% path level and, unsurprisingly, RGDP moved along with it.<br /><br />2) People forget that the housing crash began years before the recession, however RGDP and employment was more or less completely stable. It wasn't until late 2008, when NGDP crashed, that RGDP and employment tanked.ChargerCarlhttps://www.blogger.com/profile/12273242389934305333noreply@blogger.com