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Monday, June 11, 2018

A Tale of Three Nominal GDP Growth Paths

Check out the figure below. It has nominal GDP plotted for three countries, normalized to 100 in 2007. The first country (black line) has kept nominal GDP on  a stable growth path over the entire period. The second country (red line) saw its nominal GDP growth path permanently decline in 2008-2009 but has since stabilized its growth rate.  The third country (blue line) had its nominal GDP growth path collapse and has only recently seen it grow past its its 2008 peak value. 


So we see three very different paths of a nominal variable that should be controlled by monetary authorities over long periods, like that depicted in the chart. Consequently, not only are we seeing a tale of three different nominal GDP growth paths, we are also see a tale of three very different central banks policies. 

Can you guess what countries are represented by the three different lines? 

13 comments:

  1. Black - Australia, Red - USA, Blue - Italy ?

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  2. Australia, US, EZ

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  3. John, you got the first two correct. The last one is close, but no cigar!

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  4. Everyone agrees on the red (myself included). My guess for the blue one is England.

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  5. Hint: the blue line is a Eurozone country that has been in the news a lot lately.

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  6. So the answer is Israel, USA, and Italy whose monetary policy performance over the period in the charts follows that order.

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