Thursday, November 1, 2012

How Will the Fed React to Sandy?

Source: CNBC

In the period after the disaster, the return of productivity to its pre-disaster level permits firms to increase output, which lifts households’ income and enables them to increase their investment in physical capital. That process continues for a number of periods as the capital stock is slowly reconstructed. In the longer term, the protracted rebuilding of the capital stock is associated with below-trend output and persistent, above-trend paths for employment, investment, and inflation.

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