John Handley challenged me to take on the 1930s, 40s, and 50s with the dynamic equilibrium model. While the Great Depression is fairly uncertain (because the model operates on the log of the unemployment rate, returning to the linear scale makes the bands exponentially larger for higher unemployment rates), the overall model works well:
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Unemployment 1929-1968 (dynamic equilibrium…
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John Handley challenged me to take on the 1930s, 40s, and 50s with the dynamic equilibrium model. While the Great Depression is fairly uncertain (because the model operates on the log of the unemployment rate, returning to the linear scale makes the bands exponentially larger for higher unemployment rates), the overall model works well: