More excess demand: over-investment edition

Nobel laureate Paul Krugman meet Nobel laureate Ned Phelps. Ned, Paul.

Say, you two seem to have different opinions about the possibility that recessions lead to changes in the structural rate of unemployment. Can you talk amongst yourselves and get back to us with an answer?

(h/t MR. BTW, given their relative expertise, my priors are closer to Phelps’ view.)