Macroeconomic Puzzles & Long-Run Relations

Abstractions about empirical regularities and puzzles linking macroeconomic aggregates — inflation-unemployment trade-offs (Phillips curve, natural rate of unemployment), monetary identities (quantity theory of money), and anomalous cross-country or historical correlations (Feldstein-Horioka puzzle, Gibson's paradox).

5 abstractions in this family — domain-specific abstractions that sit near one another in structural-signature space (k-means over structural-signature embeddings). Each is shown with its short description.

• Feldstein-Horioka Puzzle — The anomaly that national saving and investment rates are strongly correlated across countries when frictionless capital mobility predicts near-zero — turning the regression slope into a continuous gauge of de facto capital-market integration.
• Gibson's Paradox — The gold-standard-era regularity that long-term nominal interest rates tracked the price level itself, not the rate of inflation — a Fisher-violating correlation that vanished under fiat money, marking it a regime-specific artifact rather than a law.
• Natural Rate of Unemployment — The unemployment rate consistent with stable inflation in the long run — the frictional-plus-structural floor set by labour-market frictions and institutions, below which demand stimulus buys only accelerating inflation, never durable jobs.
• Phillips Curve — The short-run inverse relation between unemployment and inflation — positioned by expected inflation, sloped by how anchored those expectations are, vertical at the natural rate in the long run, and displaced by supply shocks — whose exploitable trade-off dissolves once agents come to expect the inflation.
• Quantity Theory of Money — Bind money supply, velocity, the price level, and real output in the identity MV = PY, then add the behavioural premises that velocity is stable and output is set by real factors — so that in the long run changes in the money stock translate proportionally into the price level.