New Releases by Robert J Gordon

The dismal decade of 2010-19 recorded the slowest productivity growth of any decade in U.S. history, only 1.1 percent per year in the business sector. Yet the pandemic appears to have created a resurgence in productivity growth with a 4.1 percent rate achieved in the four quarters of 2020. This paper provides a unified framework that explains productivity growth in both the pre-pandemic and pandemic-era U.S. economy. The key insight is that in their panicked reaction to the collapse of output in the 2008-09 recession, business firms overreacted with "excess layoffs," adjusting hours to the output decline with a far higher elasticity than normal. Our regression analysis, which allows post-recession rehiring that gradually unwinds the excess layoffs, explains why productivity growth was countercyclical in 2009 and why it was so slow in 2010-16 as rehiring boosted hours growth. Post-sample simulations explain why productivity growth was so high in 2020 and why it fell to only 0.6 percent in the five quarters of 2021-22. The paper includes implications for the future long-term evolution of productivity growth in the business sector and total economy. A new data file on quarterly productivity levels and changes for 17 industries provides new perspectives for 2006-22 and particularly for the nine pandemic quarters of 2020-22. Positive pandemic-era productivity growth can be entirely explained by a surge in the performance of work-from-home service industries, while goods industries soared and then slumped, while contact services recorded strongly negative productivity growth throughout 2020-22.

In the early sixties, South Africa’s colonial policies in Namibia served as a testing ground for many key features of its repressive ‘Grand Apartheid’ infrastructure, including strategies for countering anti-apartheid resistance. Exposing the role that anthropologists played, this book analyses how the knowledge used to justify and implement apartheid was created. Understanding these practices and the ways in which South Africa’s experiences in Namibia influenced later policy at home is also critically evaluated, as is the matter of adjudicating the many South African anthropologists who supported the regime.

Introduction : the enigma of Max Gluckman -- Making the very model of a modern liberal -- London calling -- How the guinea pig burnt his own bridge -- Return to Oxford and intellectual ferment -- Landing and living in Livingi -- Mary, Max, and the Mongu masquerade -- Getting to grips with the Lozi -- Running the Rhodes-Livingstone Institute -- The seven year plan -- The African undertow

In the late 1960s the stable negatively sloped Phillips Curve (PC) was overturned by the Friedman-Phelps natural rate model. Their PC was vertical in the long run at the natural unemployment rate, and their short-run curve shifted up whenever unemployment was pushed below the natural rate. This paper criticizes the underlying assumption of the Friedman-Phelps approach that the labor market continuously clears and that changes in unemployment down or up occur only in response to "fooling" of workers, firms, or both. A preferable and resolutely Keynesian approach explains quantity rationing by inertia in price and wage setting. The positive correlation of inflation and unemployment in the 1970s and again in the 1990s is explained by joining the negatively sloped Phillips Curve with a positively sloped dynamic demand curve. For any given growth of nominal GDP, higher inflation caused by adverse supply shocks implies slower real GDP growth and higher unemployment. This "triangle" model based on inflation inertia, demand, and supply worked well to explain why inflation and unemployment were both positively and negatively correlated between the 1960s and 1990s, but in the past decade the slope of the short-run Phillips Curve has flattened as inflation exhibited a muted response to high unemployment in 2009-13 and low unemployment in 2016-2018. It remains to be seen whether a continuation of low unemployment will cause a modest and fixed extra amount of inflation, thus reviving the stable Phillips curve of the early 1960s, or whether inflation will continuously accelerate as Friedman and Phelps would have predicted.

How America's high standard of living came to be and why future growth is under threat In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, motor vehicles, air travel, and television transformed households and workplaces. But has that era of unprecedented growth come to an end? Weaving together a vivid narrative, historical anecdotes, and economic analysis, The Rise and Fall of American Growth challenges the view that economic growth will continue unabated, and demonstrates that the life-altering scale of innovations between 1870 and 1970 cannot be repeated. Gordon contends that the nation's productivity growth will be further held back by the headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government, and that we must find new solutions. A critical voice in the most pressing debates of our time, The Rise and Fall of American Growth is at once a tribute to a century of radical change and a harbinger of tougher times to come.

Secular stagnation refers not to the literal stagnation, i.e., stopping of economic growth but rather to the slowing of U.S. potential real GDP growth to half or less of its historical pace. The retardation of potential real GDP growth matters both because of its direct impact on the standard of living and also because of its indirect effect on net investment, which in turn feeds back to slower productivity growth. During the decade ending in 2014:Q4, U.S. real GDP grew at only 1.55% per year, almost exactly half the growth rate of 3.12% per year achieved during the previous three decades, 1974-2004, and an even smaller fraction of the 3.62% per year performance of 1929-1974. This paper predicts that slow growth of around 1.5% per year will continue over the next decade or two. Part of the slowdown in output growth is due to a decline in the growth rate of the working age population. A second reason is a shift in worker hours per capita from an increase due to the entry of women into the labor force during 1965-1995 to a future decrease due primarily to the retirement of the baby-boom generation. A third reason is an ongoing slowdown in the growth rate of output per hour, from 1.72% per year during 1974-2004 to 1.10% per year in 2004-2014 and to an even slower 0.55% per year during 2009-2014. The sources of the decline in productivity growth combine diminishing returns that have set in following the ICT revolution of the 1996-2004 "dot.com" era with a decline in business dynamism, as the entry of new business firms has steadily declined over the past three decades relative to the exit of existing firms. Moore's Law describing the steady exponential increase in the number of transistors on a chip became obsolete a decade ago. The historic rise of educational attainment has slowed to a crawl, and the declining share of children growing up in two-parent families may lead to a future decrease in high school completion and an increase in criminal activity among youth. While future productivity growth will be slower than before 2004, it will still continue as in the past decade at a rate slightly in excess of one% per year.

This paper raises basic q ...

Macroeconomics is widely praised for its ability to present theory as a way of evaluating key macro questions, such as why some countries are rich and others are poor. Students have a natural interest in what is happening today and what will happen in the near future. Macroeconomics capitalizes on their interest by beginning with business cycles and monetary-fiscal policy in both closed and open economy. After that, Gordon presents a unique dynamic analysis of demand and supply shocks as causes of inflation and unemployment, followed by a dual approach to economic growth in which theory and.

This paper raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow's seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history. The paper is only about the United States and views the future from 2007 while pretending that the financial crisis did not happen. Its point of departure is growth in per-capita real GDP in the frontier country since 1300, the U.K. until 1906 and the U.S. afterwards. Growth in this frontier gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. The paper is about "how much further could the frontier growth rate decline?" The analysis links periods of slow and rapid growth to the timing of the three industrial revolutions (IR's), that is, IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present. It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972. Once the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was much slower than before. In contrast, IR #3 created only a short-lived growth revival between 1996 and 2004. Many of the original and spin-off inventions of IR #2 could happen only once - urbanization, transportation speed, the freedom of females from the drudgery of carrying to.

Macroeconomics is widely praised for its ability to present theory as a way of evaluating key macro questions, such as why some countries are rich and others are poor. Students have a natural interest in what is happening today and what will happen in the near future. Macroeconomics capitalizes on their interest by beginning with business cycles and monetary-fiscal policy in both closed and open economy. After that, Gordon presents a unique dynamic analysis of demand and supply shocks as causes of inflation and unemployment, followed by a dual approach to economic growth in which theory and real-world examples are used to compare rich and poor countries.

Abstract: The statistical trend for growth in total economy LP ranged from 2.75 percent in early 1962 down to 1.25 percent in late 1979 and recovered to 2.45 percent in 2002. Our results on productivity trends identify a problem in the interpretation of the 2008-09 recession and conclude that at present statistical trends cannot be extended past 2007

This paper provides a comprehensive survey of seven aspects of rising inequality that are usually discussed separately: changes in labor's share of income; inequality at the bottom of the income distribution, including labor mobility; skill-biased technical change; inequality among high incomes; consumption inequality; geographical inequality; and international differences in the income distribution, particularly at the top. We conclude that changes in labor's share play no role in rising inequality of labor income; by one measure labor's income share was almost the same in 2007 as in 1950. Within the bottom 90 percent as documented by CPS data, movements in the 50-10 ratio are consistent with a role of decreased union density for men and of a decrease in the real minimum wage for women, particularly in 1980-86. There is little evidence on the effects of imports, and an ambiguous literature on immigration which implies a small overall impact on the wages of the average native American, a significant downward effect on high-school dropouts, and potentially a large impact on previous immigrants working in occupations in which immigrants specialize.The literature on skill-biased technical change (SBTC) has been valuably enriched by a finer grid of skills, switching from a two-dimension to a three- or five-dimensional breakdown of skills. We endorse the three-way quot;polarizationquot; hypothesis that seems a plausible way of explaining differentials in wage changes and also in outsourcing.To explain increased skewness at the top, we introduce a three-way distinction between market-driven superstars where audience magnification allows a performance to reach one or ten million people, a second market-driven segment consisting of occupations like lawyers and investment bankers, and a third segment consisting of top corporate officers. Our review of the CEO debate places equal emphasis on the market in showering capital gains through stock options and an arbitrary management power hypothesis based on numerous non-market aspects of executive pay.Data on consumption inequality are too fragile to reach firm conclusions. We introduce two new issues, disparities in the growth of price indexes and also of life expectancy between the rich and the poor. We conclude with a perspective on international differences that blends institutional and market-driven explanations.

Abstract: Traditional Keynesian multipliers assume that there are no capacity constraints to impede a fiscal-driven expansion in aggregate demand. On the contrary, we find ample evidence of capacity constraints in 1941, particularly in the second half of that year. As a result our preferred government spending multiplier is 1.80 when the time period ends in 1941:Q2 but only 0.88 when the time period ends in supply-constrained 1941:Q4. Only the 1.80 multiplier is relevant to situations like 2009-10 when capacity constraints are absent across the economy

Macroeconomics is widely praised for its ability to present theory as a way of evaluating key macro questions, such as why some countries are rich and others are poor. Gordon makes extensive use of data, international examples, and case studies throughout, and the Eleventh Edition incorporates critical developments in the field. New topics include the housing bubble and housing wealth, the effect of oil prices on the economy, and the purchase of dollar reserves by China to finance the U.S. import deficit. Students have a natural interest in what is happening today and what will happen in the near future. Macroeconomics capitalizes on their interest by beginning with business cycles and monetary-fiscal policy in both closed and open economy. After that, Gordon presents a unique dynamic analysis of demand and supply shocks as causes of inflation and unemployment, followed by a dual approach to economic growth in which theory and real-world examples are used to compare rich and poor countries.

This is a review article of a new economic history of the Nazi economy by Adam Tooze which cuts through the debate between economics and Hitler's mistakes as fundamental causes of the outcome. Instead, Tooze argues that the invasion of the Soviet Union was the inevitable result of Hitler's paranoia about the land-starved backwardness of German agriculture as contrasted with the raw material and land resources of America's continent and Britain's empire. The American frontier expansion that obliterated the native Indians provided Hitler with a explicit precedent, which he often cited, for pushing aside the native populations in the east to provide land for German Aryan farmers.

American business has recently been under fire, charged with inflated pricing and an inability to compete in the international marketplace. However, the evidence presented in this volume shows that the business community has been unfairly maligned—official measures of inflation and the standard of living have failed to account for progress in the quality of business equipment and consumer goods. Businesses have actually achieved higher productivity at lower prices, and new goods are lighter, faster, more energy efficient, and more reliable than their predecessors. Robert J. Gordon has written the first full-scale work to treat the extent of quality changes over the entire range of durable goods, from autos to aircraft, computers to compressors, from televisions to tractors. He combines and extends existing methods of measurement, drawing data from industry sources, Consumer Reports, and the venerable Sears catalog. Beyond his important finding that the American economy is more sound than officially recognized, Gordon provides a wealth of anecdotes tracing the postwar history of technological progress. Bolstering his argument that improved quality must be accurately measured, Gordon notes, for example, that today's mid-range personal computers outperform the multimillion-dollar mainframes of the 1970s. This remarkable book will be essential reading for economists and those in the business community.

Murder, the high seas, deception, smuggling and success, in the shipping world, combine to tell the tale of Sean McChesney's fall and rise.

This paper investigates the sources of the widely noticed reduction in the volatility of American business cycles since the mid 1980s. Our analysis of reduced volatility emphasizes the sharp decline in the standard deviation of changes in real GDP, of the output gap, and of the inflation rate. The primary results of the paper are based on a small three-equation macro model that includes equations for the inflation rate, the nominal Federal Funds rate, and the change in the output gap. The development and analysis of the model goes beyond the previous literature in two directions. First, instead of quantifying the role of shocks-in-general, it decomposes the effect of shocks between a specific set of supply shock variables in the model's inflation equation, and the error term in the output gap equation that is interpreted as representing "IS" shifts or "demand shocks". It concludes that the reduced variance of shocks was the dominant source of reduced business-cycle volatility. Supply shocks accounted for 80 percent of the volatility of inflation before 1984 and demand shocks the remainder. The high level of output volatility before 1984 is accounted for roughly two-thirds by the output errors (demand shocks) and the remainder by supply shocks. The output errors are tied to the paper's initial decomposition of the demand side of the economy, which concludes that three sectors - residential and inventory investment and Federal government spending, account for 50 percent in the reduction in the average standard deviation of real GDP when the 1950-83 and 1984-2004 intervals are compared. The second innovation in this paper is to reinterpret the role of changes in Fed monetary policy. Previous research on Taylor rule reaction functions identifies a shift after 1979 in the Volcker era toward inflation fighting with no concern about output, and then a shift in the Greenspan era to a combination of inflation fighting along with strong countercyclical responses t.

The uncanny parallel of the stock market boom, bubble, and collapse in 1995-2001 as in 1924-1930, reminds us that business cycles emerge from the complex interplay of multiple factors, not just one.Common elements between the two decades are overshadowed by differences, including the much larger share of agricultural output in the 1920s, the weakness of farm prices throughout the decade, and the role of collapsing farm prices in the pervasive post-1929 downward shift in aggregate demand. Another partly related difference was a high volatility of inventory accumulation that reflected the larger share of agriculture and manufacturing in the economy of the 1920s. Failures of public policy in the 1920s included the absence of deposit insurance, the unit-banking regulations that prevented the diversification of financial risk across regions, and the low margin requirements that exacerbated swings in stock market prices

Starting from the same level of productivity and per-capita income as the United States in the mid-nineteenth century, Europe fell behind steadily to a level of barely half in 1950, and then began a rapid catch-up. While Europe's level of productivity has almost converged, its income per person has leveled off at about three-quarters of America's. How could Europe be so productive yet so poor? The simple answer is that hours per person in Europe have fallen drastically in the past 40 years, reflecting long vacations, high unemployment, and low labor force participation, and only about one-third of the Europe-America difference reflects voluntarily chosen leisure. The paper contains a welfare analysis of the difference and argues that conventional national income data overstate the advantage of America over Europe, and that Europe's welfare is about 8 percent below the American level rather than the 25 percent implied by a comparison of measured income per capita. A historical analysis traces Europe's falling behind after 1870 to American political unity, fostering large-scale material-intensive manufacturing and a set of marketing innovations to a set of additional advantages that would not have been possessed even if Europe had hypothetically created a United States of Europe in 1870. After 1913 the U.S. surged further ahead, due to its early exploitation of the great inventions of electricity and the internal combustion engine, while Europe was distracted by wars and interwar economic chaos. After 1950 Europe's catch up was achieved both by exploiting the great inventions 40 years late, and also by the gradual erosion of early American advantages. But after 1995 the gap began to widen again, a development that brings to the forefront fundamental American advantages in fostering and exploiting innovation.

By far the most widely noted and puzzling aspect of the current economic recovery is its failure to create jobs. While payroll employment in seven previous recessions increased a full 7 percent in the first twenty-three months following the NBER business cycle trough, such employment increased by only 0.8 percent - just over one-tenth as much - from March 1991 to March 1993. Part of the explanation of negligible job growth lies in the recovery's relatively slow pace of output growth, which has been little more than one-third the usual postwar pace. The remaining part of the job puzzle stems from the ebullient performance of productivity - that is, output per hour in the nonfarm business sector - which registered a growth rate of 3.2 percent in the four quarters ending in 1992:4, the most rapid rate recorded in any similar period for more than sixteen years. The share of output growth accounted for by productivity growth in the current recovery is 112 percent, far exceeding the 47 percent average of the previous postwar recoveries at the same stage. For any given pace of output growth, more rapid productivity growth by definition implies less rapid growth in labor input. This suggests that the recent revival in productivity growth may be the key to understanding the puzzling absence of job creation in the recovery. Productivity-led growth is nothing but good news. In the two decades ending in mid-1992, the nonfarm business sector registered an average annual productivity growth rate of less than 1 percent: 0.85 percent, to be exact. Imagine the benefits to the economy if the recent good news on productivity were to imply, as some have suggested, a doubling in productivity growth to a rate of 1.7 percent over the next decade. For any given path of labor input, nonfarm private business output in the year 2003 would be almost 9 percent larger - some $450 billion more - allowing that much more private and/or public spending. Productivity-led growth does not imply a jobless recovery in anything but the shortest run. Instead, any beneficial shock to productivity growth sets the stage for lower inflation that enables policy makers to stimulate output growth sufficiently to create the same number of jobs that would have occurred in the absence of the shock. If the jobless character of the 1991-93 recovery indeed has been caused by a benign productivity shock, then its jobless character implies that there has been too little stimulus to output growth, not that a productivity surge must necessarily rob the nation of jobs.

After fifty years of catching up to the United States level of productivity, since 1995 Europe has been falling behind. The growth rate in output per hour over 1995-2003 in Europe was just half that in the United States, and this annual growth shortfall caused the level of European productivity to fall back from 94 percent of the United States level to 85 percent. Fully one-fifth of the European catch-up (from 44 to 94 percent) over the previous half-century has been lost over the period since 1995. Disaggregated studies of industrial sectors suggest that the main difference between Europe and the United States is in ICT-using industries like wholesale and retail trade and in securities trading. The contrast in retailing calls attention to regulatory barriers and land-use regulations in Europe that inhibit the development of the big box retailing formats that have created many of the productivity gains in the United States. For many decades, the United States and Europe have gone in opposite directions in the public policies relevant for metropolitan growth. The United States has promoted highly dispersed low-density metropolitan areas through its policies of building intra-urban highways, starving public transit, providing tax subsidies to home ownership, and allowing local governments to maintain low density by maintaining minimum residential lot sizes. Europeans have chosen different policies that encourage high-density residential living and retail precincts in the central city while inhibiting the exploitation of greenfield suburban and exurban sites suitable for modern big box retail developments. The middle part of the paper draws on recent writing by Phelps: economic dynamism is promoted by policies that promote competition and flexible equity finance and is retarded by corporatist institutions designed to protect incumbent producers and inhibit new entry. European cultural attributes inhibit the development of ambition and independence by teenagers and young adults, in contrast to the

(1) Whatever happened to the cyclical effect? Skeptics were justified on the basis of data through the end of 1999 in their claim that part of the post-1995 productivity growth revival reflected the normal cyclical correlation between productivity and output growth. In contrast data through mid-2003 reveal only a negligible cyclical effect for 1995-99 but rather a temporary bubble in 2002-03. (2) Why did productivity growth accelerate after 2000 when the ICT investment boom was collapsing? The most persuasive argument points to unusually savage corporate cost-cutting and hidden intangible investments in the late 1990s that provided productivity benefits after 2000. (3) The steady decline in the price of computer power implies steady technical progress, but then why did computers produce so little productivity growth before 1995 and so much afterwards? We draw an analogy to electricity, where miniaturization was the key step in making small electric motors practicable, and the internal combustion engine, where complementary investments, especially roads, were necessary to reap benefits. (4) What does the collapse of the investment boom imply about the future of innovation? First-rate inventions in the 1990s, notably the web and user-friendly business productivity software, are being followed by second-rate inventions in the current decade. (5) Finally, why did productivity growth slow down in Europe but accelerate in the U. S.? A consensus is emerging that U. S. institutions foster creative destruction and financial markets that welcome innovation, while Europe remains under the control of corporatist institutions that dampen competition and inhibit new entry. Further, Europe lacks a youth culture like that of the U. S. which fosters independence: U. S. teenagers work after school and college students must work to pay for much of their educational expense. There is a chasm of values across the Atlantic.