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Afternoon Must-Read: Simon Wren-Lewis: Endogenous Supply and Depressed Demand - Washington Center for Equitable Growth
Simon Wren-Lewis: Endogenous Supply and Depressed Demand: “Without fiscal austerity the US, UK and Eurozone…
…could currently be at output levels that are above current estimates of potential or natural output…. But are these estimates of potential output really independent of the path of actual output?… We know that stylised view is wrong for a variety of reasons. Labour that has been unemployed may become deskilled. Firms that are forced to cut back on investment in a recession may take time to rebuild their productive capacity. However there may be other ways it is wrong