Posted by: gaule_hero December 16, 2005
for the economists ;)
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iamme ji - As far as I know, there is no such thing as equilibrium level of GDP. GDP is just an accounting identity (C+I+G+NX). If you meant “potential GDP” when you say “equilibrium GDP” then we don’t have enough information to do the calculation (we need productivity figure). If your question is given unplanned investment of -10, what would be the GDP next period (quarter or year), then again we don’t have enough information to do the calculation. It depends on next period’s consumption and planned investment. I am not sure where you are coming from. In econ-speak “unplanned investment” is usually unexpected inventory buildup (because sales were weaker than forecasted). Inventory cycles are a big drivers of economic i.e. GDP cycles. Incidentally, Chairman Greenspan was one of the first people to discover it way back in the 1970s.
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