Friday, April 28, 2017

Update to the predicted path of NGDP

The new GDP numbers are out today, and RGDP came in a bit low per the dynamic equilibrium. However the NGDP number is basically on track [1] with the prediction started over two years ago (most recently updated here):



I added orange dots and an orange dotted line to show the data available at the time. It looks like we can pretty well reject the "old normal" exponential growth model (gray dashed in both graphs). In the second graph, the model NGDP growth rate (blue line) appears biased high by 0.2 percentage points compared to the linear fit to the data (dotted yellow line).

There are still potential revisions (see the difference between the orange dotted and yellow curves), so 26 May 2017 we'll get the second estimate.

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Footnotes:

[1] Meaning the deflator was high, which it was at 2.2%.

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