Paul Krugman: The Economic Future Isn’t What It Used to Be: "The most compelling evidence, cited by both Fatás/Summers and Ball, is that the size of the Great Shortfall varies a lot between countries and the countries whose estimated economic potential has taken the biggest hit are precisely the countries that had the biggest slumps in the economic crisis. Indeed, the relationship between output decline in the crisis and the fall in long-run potential GDP is pretty much one-for-one...


#shouldread #hysteresis #macro

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