Sunday, February 24, 2013

Unemployment and growth in the euro periphery

Martin Wolf had a few graphs in one of his recent columns that are worth reproducing. The first below shows the growth collapse.
Note that the recovery was very short lived and all rapidly fell into a double-dip recession. And as per Okun's Law, if output falls you should expect unemployment to go up. And indeed up it went.

Greece and Spain breaking the Great Depression like barrier of 25% of the labor force. So that's what austerity does. Back in the 1930s a similar situation is what made anyone that was reasonable Keynesian.

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