BRYAN CAPLAN
May 7, 2013
Keynesian Bets: What's Out There
May 6, 2013
Keynesian Bets Bleg
May 6, 2013
The Pyramid of Macroeconomic Insight and Virtue
May 2, 2013
A Natalist Provision
May 1, 2013
I Was a Teenage Misanthrope
DAVID HENDERSON
May 5, 2013
John Thacker on Vaccinations and the Sequester
May 3, 2013
Chef Rudy's Virtues Project
May 2, 2013
My take on Reinhart and Rogoff
May 1, 2013
Medicare Kills a Program
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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?