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Jel Classification:E23 

Working Paper
Why has the cyclicality of productivity changed? What does it mean?

U.S. labor and total factor productivity have historically been procyclical?rising in booms and falling in recessions. After the mid-1980s, however, TFP became much less procyclical with respect to hours while labor productivity turned strongly countercyclical. We find that the key empirical ?fact? driving these changes is reduced variation in factor utilization?conceptually, the workweek of capital and labor effort. We discuss a range of theories that seek to explain the changes in productivity?s cyclicality. Increased flexibility, changes in the structure of the economy, and shifts in ...
Working Paper Series , Paper 2016-7

Working Paper
Aggregate Implications of Changing Sectoral Trends

We find disparate trend variation in TFP and labor growth across major U.S. production sectors over the post-WWII period. When aggregated, these sector-specific trends imply secular declines in the growth rate of aggregate labor and TFP. We embed this sectoral trend variation into a dynamic multi-sector framework in which materials and capital used in each sector are produced by other sectors. The presence of capital induces important network effects from production linkages that amplify the consequences of changing sectoral trends on GDP growth. Thus, in some sectors, changes in TFP and ...
Working Paper , Paper 19-11

Working Paper
A Macroeconomic Model with Financial Panics

This paper incorporates banks and banking panics within a conventional macroeconomic framework to analyze the dynamics of a financial crisis of the kind recently experienced. We are particularly interested in characterizing the sudden and discrete nature of the banking panics as well as the circumstances that makes an economy vulnerable to such panics in some instances but not in others. Having a conventional macroeconomic model allows us to study the channels by which the crisis affects real activity and the effects of policies in containing crises.
International Finance Discussion Papers , Paper 1219

Working Paper
Small and Large Firms over the Business Cycle

Drawing from confidential firm-level data of US manufacturing firms, we provide new evidence on the cyclicality of small and large firms. We show that the cyclicality of sales and investment declines with firm size. The effect is primarily driven by differences between the top 0.5% of firms and the rest. Moreover, we show that, due to the skewness of sales and investment, the higher cyclicality of small firms has a negligible influence on the behavior of aggregates. We argue that the size asymmetry is unlikely to be driven by financial frictions given 1) the absence of statistically ...
Working Papers , Paper 741

Working Paper
Long and Plosser Meet Bewley and Lucas

We develop a N-sector business cycle network model a la Long and Plosser (1983), featuring heterogenous money demand a la Bewley (1980) and Lucas (1980). Despite incomplete markets and a well-defined distribution of real money balances across heterogeneous households, the enriched N-sector network model remains analytically tractable with closed-form solutions up to the aggregate level. Relying on the tractability, we establish several important results: (i) The economy's input-output network linkages become endogenously time-varying over the business cycle?thanks to the influence of the ...
Working Papers , Paper 2018-8

Working Paper
Industrialization and the demand for mineral commodities

This paper uses a new data set extending back to 1840 to investigate how industrialization affects the derived demand for mineral commodities. I establish that there is substantial heterogeneity in the long-run effect of manufacturing output on demand across five commodities after controlling for sectoral change, substitution and technological development. My results imply substantial differences across commodities with regard to future demand from industrializing countries and with regard to the effect of demand shocks on prices. Models should include non-Gormand preferences to account for ...
Working Papers , Paper 1413

Journal Article
Industrial production and capacity utilization: the 2001 annual revision

In late 2001, the Board of Governors of the Federal Reserve System published the annual revision of its index of industrial production and the related measures of capacity and capacity utilization for the period January 1992 to October 2001. The updated measures reflect the incorporation of newly available, more-comprehensive source data and the introduction of improved methods for compiling a few series. ; Measured fourth quarter to fourth quarter, increases in rates of industrial output and capacity have been revised downward from rates previously reported for 1999 and 2000. The revision ...
Federal Reserve Bulletin , Volume 88 , Issue Mar , Pages 173-187

Working Paper
Productivity and Potential Output Before, During, and After the Great Recession

U.S. labor and total-factor productivity growth slowed prior to the Great Recession. The timing rules explanations that focus on disruptions during or since the recession, and industry and state data rule out ?bubble economy? stories related to housing or finance. The slowdown is located in industries that produce information technology (IT) or that use IT intensively, consistent with a return to normal productivity growth after nearly a decade of exceptional IT-fueled gains. A calibrated growth model suggests trend productivity growth has returned close to its 1973-1995 pace. Slower ...
Working Paper Series , Paper 2014-15

Newer need not be better: evaluating the Penn World Tables and the World Development Indicators using nighttime lights

Nighttime lights data are a measure of economic activity whose measurement error is plausibly independent of the errors of most conventional indicators. Therefore, we can use nighttime lights as an independent benchmark to assess existing measures of economic activity (Pinkovskiy and Sala-i-Martin 2016). We employ this insight to find out which vintages of the Penn World Tables (PWT) and of the World Development Indicators (WDI) better estimate true income per capita. We find that revisions of the PWT do not necessarily dominate their predecessors in terms of explaining nighttime lights (and ...
Staff Reports , Paper 778

Journal Article
Industrial Production and Capacity Utilization: Recent Developments and the 1999 Revision

In late 1999, the Federal Reserve published revised measures of industrial production, capacity, and capacity utilization for the period January 1992 through October 1 999. The updated measures reflect both the incorporation of newly available, more comprehensive source data typical of annual revisions and the introduction of improved methods for compiling a few series, including computer and office equipment and motor vehicles. The new source data are for recent years, primarily from 1997 on, and the modified methods affect data beginning in 1992. The production index for the third quarter ...
Federal Reserve Bulletin , Volume 86 , Issue 3 , Pages pp. 188-205


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