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The Financial Wedge
0
2
4
6
8
10
12
14
16
2009 2012 2015 2018 2021
Percentper
year
2
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The Ratio of Consumption to
Disposable Income
0.85
0.86
0.87
0.88
0.89
0.90
0.91
0.92
0.93
0.94
2006 2007 2008 2009 2010 2011 2012 2013
3
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Real Household Liabilities
80
85
90
95
100
105
110
2006 2007 2008 2009 2010 2011 2012 2013
4
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Burden of Deleveraging as a
Percent of Consumption
5
0
5
10
ntofconsumption
15
10
20 00 2 001 20 02 200 3 2004 20 05 200 6 2007 2 008 200 9 2010 2
011
Perce
5
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Google searches for withdrawal
penalty
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012 2013
Index
value
6
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In Equilibrium, the Real Interest
Rate is at the Level that Equates
Output Demand to Supply
0.025
0.020
0.015
0.010
0.005
0.000
0.005
0.010
0.015
0.020
0.025
0.94 0.96 0.98 1.00 1.02 1.04 1.06 1.08
Realinterestrate
Output
Supply Demand
7
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Excess Supply of Output when
the ZLB Binds
0.025
0.020
0.015
0.010
0.005
0.000
0.005
0.010
0.015
0.020
0.025
0.92 0.94 0.96 0.98 1.00 1.02 1.04 1.06 1.08
Realinterestrate
Output
Supply Demand
Excesssupply
ofoutput
Interestrate
boundedabove
equilibriumlevel
8
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Two Measures of U.S. Inflation
3
2
1
0
1
2
3
4
5
6
2006 2007 2008 2009 2010 2011 2012 2013
TotalCPI
PCEcore
Target
9
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U.S. Wage Inflation
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2006 2007 2008 2009 2010 2011 2012 2013
10
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Job Value from JOLTS Compared
to Wilshire Stock-Market Index
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0
200
400
600
800
1000
1200
1400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2012
Jobvalue
(rightscale)
Stockmarket
(rightscale)
11
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ZLB Analysis with Shifts in Both
Demand and Supply
0.025
0.020
0.015
0.010
0.005
0.000
0.005
0.010
0.015
0.020
0.025
0.90 0.95 1.00 1.05 1.10
Realinterestrate=minusinflation
Output
Supply
Demand
12
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Stocks of Business, Residential,
and Consumer Physical Capital
80
85
90
95
100
105
110
115
120
125
2004 2005 2006 2007 2008 2009 2010 2011
Business
Residential
Consumerdurables
13
