December 6, 2018

Is the economy headed for recession?

An Allegory The economy is like an old pickup truck, heavily laden with produce. At times, absurdly overloaded with baskets of apples and crates of cabbages. When the truck “hits a bump”, produce might fall off the truck if it is heavily laden and the bump is sufficiently jarring. In this allegory, baskets of produce represent jobs and loans. The bumps the truck hits represent unexpected, downward shocks to NGDP. If the nominal bump is hard enough, some loans will fail and jobs will be lost, think of a crate of cabbages (jobs) sliding from the top of the heap… Read More

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