ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
SHARE
Bryan, if anyone had answered your question when Milton Friedman asked it for the first time (it was around 1970), Milton would have given that economist two Nobel prizes. It reminds me of another question that Larry Sjaastad used to ask in the 1970s and 1980s when many Latin American were being forced to devalue their currencies: how large nominal devaluation should be to get a particular real devaluation (indeed Larry knew that there was no answer to it but that was the purpose of asking it).
The question doesn't make sense in the recalc realm. NGDP fell 5% because of the recalc problem. If there was no recalc problem, NGDP woulnd't have fallen much at all, and therefore real gdp would not have fallen either.
I respond to the question with a question: why does nominal GDP suddenly fall by 5 percent?