Friday, August 16, 2002

Mind the Gap, says Paul Krugman.

The 'gap' refers to an output gap, a term that this not-an-economist didn't know about, which is the difference between potential growth at full employment and actual growth. The output gap is part of what's been causing Japan's deflation for the last 15 years. Krugman then goes down a list of conditions explaining why that gap shouldn't hurt us here, and how those conditions that existed during the Clinton years don't exist now.

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