Stabilising the real economy increases average output

a column by Karl Walentin and Andreas Westermark for VOX: CEPR’s Policy Portal

The Great Recession has spawned a vigorous debate regarding the potential benefits of stabilising the real economy. This issue takes on additional importance as the current economic situation in some countries, including the US, seem to imply an interesting monetary policy trade-off between stabilising the inflation and the unemployment level. This column summarises research indicating that stabilising the real economy raises the long-run level of output.

Continue reading

One idea really caught my attention. I’ll comment in relation to my own experience.
When I worked for the Employment Department / MSC in its many guises I learned how to conduct an interview, how to find information, how to program and lots of other things. I learned “on the job” and if there was something else I needed to learn it was provided. Including paid time off to do an O-level in Statistics.
Running my own business was rather different. I had to justify paying for the training I thought I needed but much of my learning came through community groups with an annual subscription. I was in work and learned what was necessary to keep me in work.
Learning came through working. If I was to be unemployed then my learning would cease. The human capital of this household would decrease. Multiply this by the thousands of people laid off in the Great Recession then we realise that human capital decreases.

---