Wicksell’s Depression Star, Part 3
Academic reconstructions for R-star over the last fifteen years leaves them puzzled. For reasons they can’t figure, the natural rate dropped precipitously in 2008 and then never came back. It isn’t just R-star, though, since that is simply consistent with every bit of macroeconomic data and systemic interest rate behavior. The only way to explain all the facts is eurodollar.
