I was underwhelmed by Krugman’s recent interpretation of the V-shaped recovery from the 1981-2 recession. I have written about briefly about the 1983-4 recovery before but this post will be a bit longer. First is NGDP, GDP, inflation, and 10 year inflation expectations from 1982-1987.
Pretty simple, NGDP is at 4% in 1982, the result is a Fed induced recession to fight inflation. 1983 to 1984, NGDP raises to 12 percent a year, the result is a robust recovery. Let's compare that with the current recession.
