From the Money Illusion:
The musical chairs model, updated
It’s been about 6 months since we’ve looked at the sticky wage model, so let’s see how it’s doing:
The
fit seems better than ever. To my eyes it looks like “real wages”
[(nominal average hourly earnings)/(NGDP/pop)] lead unemployment by
about a month or two. That’s partly an artifact of a flaw in the St.
Louis Fred graphing program. The (W/(GDP/pop)) data for Q4 is put in the
October 2013 slot, whereas it should be November 2013. If you shifted
the wage series one month to the right the correlation would look even
closer....MORE
The HT goes to
askblog although he goes with snark rather than curiosity about whether this information could be used to advantage on a day such as today:
Inferring from an Identity
Scott Sumner writes,
To my eyes it looks like “real wages” [(nominal average hourly earnings)/(NGDP/pop)] lead unemployment by about a month or two
Shock me, shock me. Let’s see...
