Issues in the Interpretation of the Productivity Boom and IT Investment Slump Robert J. Gordon Northwestern University, and NBER Presented at Productivity.

Slides:



Advertisements
Similar presentations
Growth and Productivity in the European Union Presentation for the EUKLEMS workshop, September 2006, Vienna Marcel Timmer, Groningen Growth of Development.
Advertisements

Economic Changes and Cycles
Fiscal Policy Has it worked? Is more needed? Oregon Economic Forum October 22, 2009 Mark Thoma Department of Economics University of Oregon.
Inflation, the NAIRU, Potential Output and Productivity Growth During the Slow Recovery Robert J. Gordon, Northwestern University and NBER NBER Session.
Robert J. Gordon, Northwestern University and NBER, NABE 48 th Annual Meeting, NBER Session, Copley Place Marriott, Boston, September 11, 2006 The U. S.
Economic Assessment William Strauss Senior Economist and Economic Advisor Federal Reserve Bank of Chicago Not So Silent Partners: Libraries and Local Economic.
Profit-Maximization. Economic Profit u Profit maximization provides the rationale for firms to choose the feasible production plan. u Profit is the difference.
Houston, Like the Nation, is Returning to Growth Tim Hopper Senior Economist Federal Reserve Bank of Dallas June 15, 2004.
Robert J. Gordon Northwestern University and NBER NBER Board of Directors, BCDC Panel Cambridge, September 8, 2008 Going Beyond the BCDC Indicators: Can.
1 Japan’s Economic Prospects Richard Katz The Oriental Economist Report © NYU March 4, 2007.
Productivity and Economic Growth in the Election Year and Beyond Robert J. Gordon Northwestern University, and NBER Presentation at Vanguard, March 15,
U. S. Economic Growth: Looking Far Into the Future Robert J. Gordon Stanley G. Harris Professor in the Social Sciences, Northwestern University, and NBER.
Robert J. Gordon Northwestern University and NBER AEA Session, Chicago January 6, 2007 Comments on: “A Retrospective Look at the U.S. Productivity Growth.
Services productivity growth in Australia, Europe and US Robert Inklaar Groningen Growth and Development Centre, University of Groningen and The Conference.
Economic Indicators. Concepts  Variables that provide information about the state of the economy.  Every economic indicator has a story to tell.  Need.
Chapter 6: Economic Growth Estimate economic growth and implications of sustained growth for standard of living. Trends in economic growth in U.S. and.
Robert J. Gordon Northwestern University and NBER Productivity Panel, Productivity Program Meetings, Cambridge, March 9, 2007 Was the Post-1995 Productivity.
Discussion of Kahn-Rich on Tracking the New Economy Robert J. Gordon Northwestern University and NBER Federal Reserve of San Francisco, November 7, 2003.
How Can the GDP Accounts Be Made More Effective for Business Cycle Analysis? By Brent Moulton Discussion of Issues Robert J. Gordon BEA Advisory Committee.
The Unsustainable New Economy Boom and its Lessons for the next Economic Expansion Robert J. Gordon Stanley G. Harris Professor in the Social Sciences,
1 Report on the Income- and Product-Side Estimates of Output Growth Comments Steve Landefeld Brookings Panel on Economic Activity March 19,
Charts Related to Labor Market Developments Robert J. Gordon, Northwestern and NBER CBO Advisers Meeting November 13, 2009.
Chapter Ten Economic Growth and Business Cycles. Copyright © Houghton Mifflin Company. All rights reserved.10 | 2 A long-run trend in real GDP growth.
MACROECONOMICS AND THE GLOBAL BUSINESS ENVIRONMENT The Wealth of Nations The Supply Side.
Chapter 10 Bringing in the Supply Side: Unemployment and Inflation? We might as well reasonably dispute whether it is the upper or the under blade of a.
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 17 Labor Productivity: Wages, Prices, and Employment.
ECON2: The National Economy
Chapter 9 Economic Growth and Rising Living Standards
Macroeconomic Forces Chapter 2. Characteristics of the Business Cycle 1. Fluctuations in aggregate business activity 2. Characteristic of a market driven.
Aggregate Demand and Aggregate Supply. Modeling the Aggregate Economy Aggregate Demand –Aggregate demand is a schedule relating the total demand for all.
Growth of the Economy And Cyclical Instability
Official Statistics and the Age of Turbulence J. Steven Landefeld May 12 th, World Congress on National Accounts.
Today’s Economic Situation: The Great Recession, The Recovery, Where We (May Be) Going? Principles of Macroeconomics 7/20/12.
The London Economy Justine Lovatt - LCCI Economist 19 February 2003.
Slide 0. slide 1 Business Cycles  Business Cycles – Business cycles are 2-year to 5-year fluctuations around trends in real GDP and other related variables.
A Guide to Economic Indicators Chapter 5 Danielle Ko Trent Musso September 5, 2006.
1 DOMESTIC ECONOMIC CONDITIONS Jeff Fuhrer Director of Research Federal Reserve Bank of Boston Equipment Leasing and Finance Association Credit and Collections.
Chapter 17: Labor Productivity: Wages, Prices, and Employment
Comments on Gali’s “Hysteresis and the European Unemployment Problem Revised” Robert J. Gordon Northwestern University, NBER, CEPR ECB Forum on Central.
Measuring National Output Chapter 5. Economic goals  Economic growth  Full employment  Low inflation  An economy grows because of increases in available.
Economics Chapter 13. National Income Accounting The measurement of the national economy’s performance. A measure of the amount of goods and services.
Learning from the Past to Invest for the Future Robert J. Gordon Northwestern Nugget Club February 13, 2005.
Economic growth Chapter 8 4/23/2017 4/23/
Chapter 3 Growth and Accumulation Item Etc. McGraw-Hill/Irwin Macroeconomics, 10e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
1 Inflation and capacity utilisation: some issues of measurement and an intangibles perspective Jonathan Haskel Imperial College Business School and CEPR.
© 2008 Pearson Addison-Wesley. All rights reserved Long-Run Economic Growth Chapter 6.
What has been the role of business investment in contributing to GDP growth in the UK To see more of our products visit our website at
Macroeconomics SSEMA1 Students will explain and describe the means by which economic activity is measured by looking at gross domestic products, consumer.
Will the Slowdown in U.S. Health Cost Growth Continue? A Factor Market Perspective May 2008 John Sabelhaus Investment Company Institute University of Maryland.
Why is productivity growth so vital? To see more of our products visit our website at Ruth Tarrant, Head of Economics and Politics, Bedales.
Macroeconomic Framework Long-Run Economic Behavior  Potential GDP : trend GDP  Determined by productivity & normal trend in hours worked  Factors.
The Economy in the Late 1920’s. As you enter the room… Pick up the worksheet and answer the bell ringer question: What factors contributed to the booming.
1 Chapter 12 Business Cycles and Unemployment Key Concepts Key Concepts Summary ©2000 South-Western College Publishing.
Education, Participation, and the Revival of U.S. Economic Growth Dale Jorgenson, Mun Ho, Jon Samuels ** Harvard University, and ** BEA World KLEMS Conference.
Creating a Forecast Charles Steindel January 21, 2010 All views expressed are those of the author only and not necessarily those of the Federal Reserve.
Productivity and Costs (Measure of Changes in Worker Efficiency) Web address: Revisions can be substantial Productivity – output of goods/services per.
Economic growth Economic growth can be defined as an increase in actual or potential GDP Using AD/AS analysis, draw an increase in actual GDP (hint,
Growth and Accumulation Chapter #3. Introduction Per capita GDP (income per person) increasing over time in industrialized nations, yet stagnant in many.
What is a business cycle?
Labor Productivity: Wages, Prices, and Employment
U.S. Economic Performance
Chapter 6: Economic Growth
Today’s Economic Situation: The Great Recession, The Recovery, Where We (May Be) Going? Principles of Macroeconomics 2/24/12.
Ellen R. McGrattan and Edward C. Prescott
Business Cycle Data Fall 2016.
Economic & Revenue Outlook
Economic Growth and Productivity
Chapter 6: Economic Growth
The Fifth World KLEMS Conference, Harvard University June 5, 2018
Economic & CU Performance Trends
Presentation transcript:

Issues in the Interpretation of the Productivity Boom and IT Investment Slump Robert J. Gordon Northwestern University, and NBER Presented at Productivity Workshop, Royal Netherlands Embassy, Washington, DC September 18, 2003

Especially since August 7, Profound Puzzlement about Productivity Behavior Labor productivity growth mid-00 to mid-03 of 3.4% p.a. dwarfs the 2.56% of 1995-mid 00. Yet the revival has been strongly linked to the ICT investment boom. How could productivity growth accelerate after ICT investment crashed?

First Puzzle, What Happened to the Cyclical Effect? Hypothesis of a Cyclical Effect for Looks Justified in Retrospect with Data of That Time Not with Today’s Data New Puzzle About Interpretation of

Today’s Trend Looks Very Different Than in early 2000

Which Trend Parameter Should We Choose?

Why Did Productivity Growth Accelerate While ICT Investment Collapsed? Oliner-Sichel Update: Contribution of Production and Use of ICT to post-1995 revival Original Data, , 81% New data: – ICT contributes 98% of revival – ICT contributes 76% of revival –August revision, down to 67%

Might Oliner-Sichel Overstate the Contribution of ICT to the Revival? O-S instantaneous vs. David’s delay Yang-Brynjolfsson’s iceberg – production of intangible capital: omitted from output, included in hours – intangible capital enters as an input, producing output, while hours disappear Disequilibrium Hypothesis, implies productivity growth faster than steady state

Seven Reasons Why Productivity Growth Should not be Extrapolated #1 The Kitchen Mismeasurement Hypothesis #2 Possible NIPA Benchmark Revisions #3 Yang-Brynjolfsson Hypothesis #4 For twenty years into the future, some weight should be given to

Two More Reasons #5 Jorgenson-Ho-Stiroh on Labor Quality – percent contribution – – #6 Europe Lags Behind. Does This Tell Us Anything?

The Seventh and Perhaps Most Important Reason Unusual pressure on firms to boost profits, translates to unusual pressure to cut costs –Comes out as reduction in payroll employment –Also in reduction of all investment, esp. ICT –Delay or abandonment of current projects with future payoff potential

Why the Unusual Pressure? Change in Management Compensation, Rewards based on Stock Price NIPA Profits Peaked in 1997 Pushed to Keep Earnings Growing –Legitimate Accounting Gimmicks –Illegitimate Gimmicks: the Scandals

Exacerbated by Stock Market Crash, Recession Pressure to Cut Costs Intensified after Stock Market turned South Accounting Scandals added Pressure in Best Guess: Overshooting, now Profits are Genuinely Improving Latest Forecast for 2003:Q3: 6.1 percent

Conclusion about Makes us More Confident About Forecasting that we’re not going back to Growth But Should We Extrapolate 3.4 (since 2000?) Extrapolate 4.0 (last 4 quarters)? Seven Reasons say We Should Not

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2025 SlidePlayer.com. Inc. All rights reserved.