It started off with a simple observation prompted by a Twitter thread: since wage growth tends to increase between recessions (i.e. wages accelerate) in the dynamic information equilibrium model (DIEM) while NGDP growth appears to be roughly constant in the absence of an asset bubble or major demographic shift (and especially in the post-Great Recession period), at some point wage growth would exceed NGDP growth. What happens then?
Limits to wage growth
Limits to wage growth
Limits to wage growth
It started off with a simple observation prompted by a Twitter thread: since wage growth tends to increase between recessions (i.e. wages accelerate) in the dynamic information equilibrium model (DIEM) while NGDP growth appears to be roughly constant in the absence of an asset bubble or major demographic shift (and especially in the post-Great Recession period), at some point wage growth would exceed NGDP growth. What happens then?