Consider the following pattern (of ):
Make the following graphs of GDP, productivity shocks (ΔA) and unemployment benefits (Δθ) make sense in the context of the neoclassical model? That is, do the series in the two bottom charts seem to explain the behavior of the series (e.g. recessions, booms) in the top chart?
Figure 1: Top panel – GDP in billion.Ch.2012$ SAAR. Middle panel: annualized quarterly total factor productivity growth adjusted for capacity utilization. Bottom chart: annualized quarterly growth in real unemployment benefits. The NBER has defined peak-to-trough recession dates as shaded. Source: BEA via FRED, Federal SFNBER and author’s calculations.