Inventory investment in the United States, 1920–1941

An inventory investment function for the inter-war period in the United States is estimated using recently published quarterly data. The estimates obtained are consistent with plausible lag structures. An increase (decrease) in sales causes unplanned inventory decumulation (accumulation) in that quarter but by the end of a year more than half of the adjustment of inventories to a new equilibrium is complete.     

Structural change in the United States: Social accounting estimates for 1982–1988

During the 1980's, extensive structural adjustments took place in the U.S. economy. This paper uses estimates of sectorally detailed social accounting matrices to evaluate the changes in receipt and expenditure patterns, including interindustry linkages, over the 1982–1988 period. Among other effects, our results reveal increasing service orientation, shifts in energy use, and increased import and foreign investment dependence. Detailed evidence on direct and indirect demand linkages indicates large shifts in the composition of government expenditure and private investment, the latter being intensified by declines in the rate of domestic capital formation.We would like to thank Greg Alward for the 1982 IMPLAN input-output data, Norman Bakka for the National Income and Product Account Data, Ken Hanson for helpful suggestions, Mark Planting for 1985 BEA input-output data, Valerie Personick for the activity output data, and two anonymous referees for helpful comments.     

Changes in Employment and Hours,and Family Income Inequality in the United.States, 1969–1989

This paper estimates how much changes in employment and hours worked for family heads and spouses contributed to the rise in the family income inequality between 1969 and 1989. Change in labor market activity of family heads accounts for half of the increase in the income gap between the top and bottom 10th families. The effect of change in work effort on the income inequality is considerably weaker where four-fifths of families in the middle of income distribution are considered. This result is robust to changes in the selection of the population. The rise in the inequality of labor market activity occurred largely within families headed by prime-age men. The rise in the percentage of families headed by female and the decline in employment rate for older family heads are relatively minor factors. [J2, E2, N3]     

Bubbles and house price dispersion in the United States during 1975–2017

We investigate the rapid growth in the dispersion of housing prices across metropolitan statistical areas (MSAs) in the United States during 1975–2017. We first examine several explanations for this pattern, and find that it is difficult to fully explain it. Our econometric analyses show that the log of price-to-rent ratios follows a random walk process. We then set up a parsimonious asset-pricing island model. We find that the dispersion of fundamental housing prices grow too slow relative to that in data. Incorporating rational bubble solutions, our calibrated model can match the rapid growth in the dispersion of housing prices.     

Structural change in the United States' social preference function, 1953–88

Many studies have used Gallup Poll data to estimate the relationship between presidential popularity, and inflaion and unemployment. Typically these estimates are made over the terms of several presidents. The only time-varying effect included in these studies is an intercept dummy. No account is taken of the possibility that there may be changes in the positions or slope of the indifference curves between inflation nd unemployment. Within this paper, we estimate the US public's social preference function between inflation and unemployment as a quadratic within a sets of equations framework. A series of F-tests leads us to believe that there is structural change in the economic variables as well as in the intercepts over time. Thus, estimating each administration individually or in the sets of equations format is superior to constraining slope coefficients to be equal across administrations by simply estimating the function over the entire time period. We hypothesize that the public has become somewhat more accustomed to high rates of inflation; this hypothesis is consistent with the observed changes in the social preference function.     

Oil crisis,energy-saving technological change and the stock market crash of 1973–74

The market value of U.S. corporations was nearly halved during the oil crisis of 1973–74. In this paper, we investigate the hypothesis that the sharp rise in energy costs during this period resulted in the obsolescence of firms' existing capital and reduced their market value. To quantify this obsolescence channel of the energy crisis, we simulate a calibrated dynamic general equilibrium model, where firms adopt energy-saving technologies along with the rise in energy prices, and the value of their installed capital falls due to investment irreversibility. We find that this channel can account for a third of the decline in Tobin's q observed in the data. Separately, we consider the role of investment subsidies extended by the government during this period to expedite the adoption of energy-saving technologies. This extension of the model can account for more than half of the decline in q. We also find empirical support for the capital obsolescence channel in cross-sectional regressions, where we show that the sectoral variation in the decline of energy use following the crisis is significant in explaining the sectoral variation in the drop of market values.     

Regional Income Inequality in the United States: 1969–2017

Abstract:

This article contains an analysis of the nation’s 100 lowest and 100 highest per capita income counties in the United States from 1969 to 2017. The low-income counties are very different from the high-income counties. Compared to the high-income counties, the low-income counties are generally small, mainly rural, and geographically concentrated. The people of the low-income counties are also more likely to be from minority groups than the people of either the nation or the high-income counties. Despite major institutional and technological change, both groups of counties exhibit considerable stability over the last half century. A reasonable assertion from the analysis is that the nature of regional income inequality is not likely to change substantially over the next half-century.     

The evolution of State-Local balance sheets in the United States, 1953–2013

State and local debt in the United States more than doubled as a share of gross domestic product between 1953 and 2007. Using a historical accounting framework, we find that there is no straightforward relationship over time between state and local deficits and debt growth. We find that only 17 percent of the variation in aggregate state–local debt ratios comes from variation in the fiscal balance. This is especially true in the 1980s, the period of most rapid increase in state–local debt ratios. Before 1980, there were small but persistent deficits, but stable debt ratios. In the 1980s, state and local sectors shifted toward budget surpluses but saw rising debt ratios. This is explained by a faster pace of asset accumulation. Our results demonstrate the autonomy of balance sheet variables and suggest that changing debt ratios cannot be explained by real income and expenditure flows.     

The United States and United Kingdom activities of Japanese banks, 1980–1988

This paper analyzes the United States and United Kingdom activities of Japanese banks by integrating their activities in these two markets with the regulatory environment for banks in Japan and Japan's overall external financial position, as well as with business opportunities in the two host countries. The paper concludes that the regulatory environment in Japan, including restraints on interest rates and possible quantitative restraints, has had an impact on activities of Japanese banks in these two foreign markets.Japanese banks appear to have adjusted to their domestic regulatory environment by using their London branches as a flexible funding source and their U.S. offices in extending commercial and industrial loans to Japan-based companies as well as a substitute location for interbank trading. In both markets Japanese banking offices are large net barrowers from unrelated banks because of constraints on raising funds in their homer market.     

Intraindustry Specialization and the Proposed Korea–United States Free Trade Agreement

Changes in intraindustry specialization indicators over the 2000–2007 period are used to assess factor adjustment pressures that may arise in Korea from the proposed Korea–United States Free Trade Agreement (KORUS FTA). There is considerable scope for intraindustry specialization between Korea and the United States. Results show few industries in Korea are candidates for adjustment problems. The 14 industries that may face adjustment pressures account for 13% of all Korean imports from the United States. Long tariff phase-out periods, tariff-rate quotas and import safeguards will be used to ease factor adjustment pressures in import-sensitive industries.     

Command-and-control revisited: Environmental compliance and technological change in Swedish industry 1970–1990

This paper addresses the issue of environmental policy instrument choice for achieving deep emission reductions in the industrial sector. Specifically, it provides: (a) a theoretical and empirical review of the conditions under which performance standards can provide efficient incentives for deep emission reductions and technology adoption; and (b) an analysis of the design and the outcomes of the standards-based regulation of industrial pollutants in Sweden during the period 1970–1990. Our empirical findings suggest that the Swedish regulatory approach comprised many key elements of an efficient policy-induced transition towards radically lower emissions in the metal smelting and pulp and paper industries. The regulation relied solely on performance standards, thus granting flexibility to firms in terms of selecting the appropriate compliance measures. These standards were implemented in combination with extended compliance periods. R&D projects and the new knowledge that was advanced incrementally in interaction between the company, the environmental authorities and research institutions provided a direct catalyst to the regulatory process. In these ways the Swedish regulatory approach provided scope for creative solutions, environmental innovation, and permitted the affected companies to coordinate pollution abatement measures with productive investments.     

How Important are Financial Frictions in the United States and the Euro Area?

This paper aims to evaluate whether frictions in credit markets are important for business cycles in the United States and the euro area. I modify the DSGE financial accelerator model developed by Bernanke, Gertler and Gilchrist (1999) by adding such frictions as price indexation to past inflation, sticky wages, consumption habits and variable capital utilization. When estimating the model using Bayesian methods, I find that financial frictions are relevant in both areas. According to the posterior odds ratio, the data clearly favor the model with financial frictions, both in the United States and the euro area. Moreover, financial frictions are larger in the euro area.     

Investment-Specific Technical Change in the United States (1947–2000): Measurement and Macroeconomic Consequences

By extrapolating Gordon's measures of the quality bias in the official price indexes, we construct quality-adjusted price indexes for 24 types of equipment and software (E&S) from 1947 to 2000 and use them to measure technical change at the aggregate and at the industry level. Technological improvement in E&S accounts for an important fraction of postwar GDP growth and plays a key role in the productivity resurgence of the 1990s. Driving this finding is 4% annual growth in the quality of E&S in the postwar period and more than 6% annual growth in the 1990s. The acceleration in the 1990s occurred in every industry, consistent with the idea that information technology represents a general-purpose technology. Furthermore, we measure for the aggregate economy and different sectors the “technological gap”: how much more productive new machines are compared to the average machine. We show that the technological gap explains the dynamics of investment in new technologies and the returns to human capital, consistent with the Nelson–Phelps conjecture. Since the technological gap continues to increase—it more than doubled in the past 20 years—our evidence supports the view that at least some of the recent increase in productivity growth is sustainable. Journal of Economic Literature Classification Numbers: D24, O47.     

Persistence,mean reversion and non-linearities in the US housing prices over 1830–2013

The objective of this study is to provide a direct estimate of the degree of persistence of measures of nominal and real house prices for the US economy, covering the longest possible annual sample of data, namely 1830–2013. The estimation of the degree of persistence accommodates for non-linear (deterministic) trends using Chebyshev polynomials in time. In general, the results show a high degree of persistence in the series along with a component of non-linear behaviour. In general, if we assume uncorrelated errors, non-linearities are observed in both nominal and real prices, but this hypothesis is rejected in favour of linear models for the log-transformation of the data. However, if autocorrelated errors are permitted, non-linearities are observed in all cases, and mean reversion is found in the case of logged prices, though given the wide confidence intervals, the unit root null hypothesis cannot be rejected in these cases.     

Labour Productivity: A Comparative Analysis of the European Union and United States, 1994–2007

This article confirms that labour productivity in the European economies has continued to slow down in recent years. U.S. productivity growth has been higher than in the EU, but only since 2001. At the same time, both economies have modified previous employment performance: EU employment growth is now higher than in U.S. This article proposes that productivity growth be explained by demand dynamics, and investment in particular, not forgetting the influence of employment, along with other factors such as new technologies.     

Privatizing Social Security in the United States—Comparing the Options

This paper uses a new version of the Auerbach–Kotlikoff model to consider alternative ways to privatize the U.S. Social Security System. The new model incorporates intra- and intergenerational heterogeneity and is closely calibrated to U.S. fiscal institutions. Three privatization issues are considered: financing the transition, participation rules, and progressivity. As shown, Social Security's privatization can substantially raise long-run living standards. But these gains come at the cost of welfare losses to transition generations and take a long time to materialize. The long-run poor have much to gain from privatization even absent an explicit redistribution mechanism. Finally, privatizations that give initial workers the option of remaining in the current system have particularly low transition costs and particularly favorable macroeconomic consequences. Journal of Economic Literature Classification Numbers: D9, E6.     

Unequal we stand: An empirical analysis of economic inequality in the United States, 1967–2006

We conduct a systematic empirical study of cross-sectional inequality in the United States, integrating data from the Current Population Survey, the Panel Study of Income Dynamics, the Consumer Expenditure Survey, and the Survey of Consumer Finances. In order to understand how different dimensions of inequality are related via choices, markets, and institutions, we follow the mapping suggested by the household budget constraint from individual wages to individual earnings, to household earnings, to disposable income, and, ultimately, to consumption and wealth. We document a continuous and sizable increase in wage inequality over the sample period. Changes in the distribution of hours worked sharpen the rise in earnings inequality before 1982, but mitigate its increase thereafter. Taxes and transfers compress the level of income inequality, especially at the bottom of the distribution, but have little effect on the overall trend. Finally, access to financial markets has limited both the level and growth of consumption inequality.     

A cross-industry analysis of intra-industry trade measurement thresholds: Canada and the United States, 1988–1999

The measurement of intra-industry trade allows for the separation of horizontal from vertical intra-industry trade using thresholds to categorize different types of trade. Using product-level data on Canada–United States international trade and corresponding cross-industry determinants, this study tests the sensitivity of these thresholds finding that previous studies may have incorrectly specified the measurement of intra-industry trade.     

Continuing Progress? Trends in Occupational Segregation in the United States over the 1970s and 1980s

This study uses comparable data on 470 detailed occupations from the 1970, 1980, and 1990 Censuses to analyze trends in occupational segregation in the United States in the 1980s and compare them in detail to the 1970s experience of declining segregation. We find that the trend towards reduced segregation did indeed continue into the 1980s at only a slightly slower pace. In both decades, changes in sex composition within occupations accounted for the major share of the decline in segregation (compared to changes in the mix of occupations in the economy). We also find that the pattern of changes in the sex composition of occupations and in the employment distribution of workers that produced the observed reductions in segregation were remarkably similar in each of these two periods. This similarity potentially poses some problems for the future. As women continue to enter the same areas, resegregation, which we found to have relatively moderate effects in the 1970s and 1980s, becomes an increasing possibility. Continued progress towards reducing occupational segregation requires that women succeed in entering a broader range of traditionally male occupations and/or a greater flow of men into traditionally female occupations.     

Does site-of-care for oncology infusion therapy influence treatment patterns,cost, and quality in the United States?

Background: The increase in hospital acquisition of community oncology clinics in the US has led to a shift in the site-of-care (SOC) for infusion therapy from the physician office (PO) to the hospital outpatient (HO) setting.

Objective: To investigate differences by SOC in treatment patterns, quality, and cost among patients with cancer undergoing first-line infusion therapy.

Research design and methods: This retrospective analysis identified adult patients from Humana medical claims who initiated infusion therapy from 2008–2012 for five common cancer types in which infusion therapy is likely, including early stage breast cancer; metastatic breast, lung, and colorectal cancers; and non-Hodgkin’s lymphoma or chronic lymphocytic leukemia. Differences by SOC in first-line treatment patterns and quality of care at end-of-life, defined as infusions or hospitalizations 30 days prior to death, were evaluated using Wilcoxon-Rank Sum and Chi-square tests where appropriate. Differences in cost by SOC were evaluated using risk-adjusted generalized linear models.

Main outcome measures: Treatment patterns, quality of care at end of life, healthcare costs.

Results: There were differences in duration of therapy and number of infusions for some therapy regimens by SOC, in which patients in the HO had shorter duration of therapy and fewer infusions. There were no differences in quality of care at end-of-life by SOC. Total healthcare costs were 15% higher among patients in HO ($55,965) compared with PO ($48,439), p?<?.0001.

Limitations: Analyses was restricted to a claims-based population of cancer patients within a health plan.

Conclusion: This study, in an older, predominantly Medicare Advantage oncology cohort, found differences by SOC in treatment patterns and cost, but not quality. Where differences were found, patients receiving care in the HO had shorter duration of therapy and fewer infusions for specific treatment regimens, but higher healthcare costs than those treated in a PO.