Sunday, January 19, 2014

A gradual rise (in the 1990s)

Last in a series

Two notes on Graph #4 from yesterday (here renumbered):

Graph #1: Monetary Interest Paid by Domestic Business, relative to Total Labor Cost
1. The latter half of the graph shows three highs, but these seem to be of three different types:
 a. A sustained high (in the 1980s)
 b. A gradual rise (in the 1990s), and
 c. A sharp rise to peak.

The middle one, b, corresponds to the good years, when productivity was up and the Federal budget got balanced: the "macroeconomic miracle" years. Goldilocks.

2. I wonder if there is some relation between these peaks and Ed Lambert's "effective demand".

1 comment:

Jazzbumpa said...

Again, my comment disappeared into Error 503 hell.

I wonder if there is some relation between these peaks and Ed Lambert's "effective demand".

Effective demand relates to labor share, and interest paid relates to capture by the finance sector.

So, in broad brush terms, I would guess yes.