Demographic Trends and Growth in Japan and the United States
Japan’s population is shrinking and getting older, with the population falling at a 0.2 percent rate this year and the working-age population (ages 16 to 64) falling at a much faster rate of almost 1.5 percent. In contrast, the U.S. population is rising at a 0.7 percent annual rate and the working-age population is rising at a 0.2 percent rate. So far, supporting the growing share of Japan’s population that is 65 and over has been the substantial increase in the share of working-age women entering the labor force. In contrast, U.S. labor force participation rates have been falling for ...
Estimating Dynamic Panel Data Models: A Practical Guide for Macroeconomists
We use a Monte Carlo approach to investigate the performance of several different methods designed to reduce the bias of the estimated coefficients for dynamic panel data models estimated with the longer, narrower panels typical of macro data. We find that the bias of the least squares dummy variable approach can be significant, even when the time dimension of the panel is as large as 30. For panels with small time dimensions, we find a corrected least squares dummy variable estimator to be the best choice. However, as the time dimension of the panel increases, the computationally simpler ...
Will Demographic Headwinds Hobble China's Economy?
China's population is only growing at a 0.5 percent annual rate, its working-age cohort (ages 15 to 64) is shrinking, and the share of the population that is 65 and over is rising rapidly. Together, these trends will act as a significant restraint on the country?s economic growth. Nonetheless, there are reasons to conclude that growth will remain relatively strong going forward, most notably because the ongoing shift from rural to urban jobs will continue to boost labor productivity for some time to come.
The Costs of (sub)Sovereign Default Risk: Evidence from Puerto Rico
Puerto Rico's unique characteristics as a U.S. territory allow us to examine the channels through which (sub)sovereign default risk can have real effects on the macroeconomy. Post-2012, during the period of increased default probabilities, the cointegrating relationship between real activity in Puerto Rico and the U.S. mainland breaks down and Puerto Rico spirals into a significant decline. We exploit the cross-industry variation in default risk exposure to identify the impact of changes in default risk on employment. The evidence suggests that there are significantly higher employment growth ...
Patents to Products: Product Innovation and Firm Dynamics
We study the relationship between patents and actual product innovation in the market, and how this relationship varies with firms’ market share. We use textual analysis to create a new data set that links patents to products of firms in the consumer goods sector. We find that patent filings are positively associated with subsequent product innovation by firms, but at least half of product innovation and growth comes from firms that never patent. We also find that market leaders use patents differently from followers. Market leaders have lower product innovation rates, though they rely on ...
Macroeconomic Effects of China's Financial Policies
The Chinese economy has undergone three major phases: the 1978?97 period marked as the SOE-led economy, the 1998?2015 phase as the investment-driven economy, and the new normal economy since 2016. All three economies have been shaped by the government financial policies, defined as a set of credit policy, monetary policy, and regulatory policy. We analyze the macroeconomic effects of these financial policies throughout the three phases and provide the stylized facts to substantiate our analysis. The stylized facts differ qualitatively across different phases or economies. We argue that the ...
Population, Migration, and Generations in Urban Neighborhoods
The number of people living in urban neighborhoods has been rising in recent decades. This Commentary investigates changes in the number, ages, and financial status of those who have been moving into and out of urban neighborhoods, using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel. I find that since 2000, the increase in urban populations is the result of young adults migrating into urban neighborhoods and senior citizens aging in place. Urban populations have also become more educated and well to do. While declining urban neighborhoods may still outnumber ...
How Does Finance Fuel Growth?
Research Spotlight of Michal Jerzmanowski. "Finance and Sources of Growth: Evidence from the U.S. States." Journal of Economic Growth, March 2017, vol. 22, no. 1, pp. 97-122.
Southeast New Mexico shines as state economy slowly mends
Strength of economy, limited benefit eligibility in Texas curb long-term unemployment rate
An unemployment rate with a persistent long-term component can be more detrimental to the economy than the same jobless rate with a smaller share of long-term unemployed.