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Contents of the April 1999 Business Economics. Most of these articles are in the members section, and most of them are in Adobe Acrobat format. See the NABE FAQ for information on downloading the free Adobe Acrobat reader.
| Productivity - Past and Future | |
| Robert Arnold and Robert Dennis (Public Section) | Perspectives
on Productivity Growth Growth of labor productivity has accelerated in the past few years, which is unusual late in an expansion. The upturn in productivity growth has led to widespread speculation about a "new era" of productivity advance. However, the recent acceleration hardly takes productivity growth above its trend since 1973, and in any case it is easily explained by: measurement changes that attribute more of nominal GDP’s growth to the real component, and hence to productivity; and the boom in capital goods spending we have experienced in the 1990s. Productivity growth remains well below the extraordinary rates of the 1950s and 1960s. |
| Jack E. Triplett | Economic
Statistics, The New Economy and the Productivity Slowdown From 1949-73, the Bureau of Labor Statistics (BLS) estimates that nonfarm multifactor productivity grew at 1.9 percent per year. After 1973, the comparable number is 0.2 percent, in spite of the economy’s substantial investment in computing equipment, the growth of the information economy, and the many innovations that have come to be known as the "new economy." Many economists believe that productivity must be growing more rapidly than the government numbers suggest. This article reviews two reasons—one wrong and one more plausible—for believing that inadequate measurement of output in our economic statistics may be hiding essential developments in our economy. |
| Daniel E. Sichel | Computers
and Aggregate Economic Growth In the past two decades, U.S. businesses have poured billions of dollars into information technology, as computer power exploded and prices plunged. In spite of these large investments, the economy’s productivity performance was lackluster through the mid-1990s, giving rise to the frequently discussed "productivity paradox." Most recently, the nation’s productivity performance has improved, raising the possibility that businesses are finally reaping the benefits of information technology. Based on the methodology in Oliner and Sichel (1994) and Sichel (1997), this paper updates calculations for the contribution of computer hardware to economic growth. These calculations point to a striking step-up in the contribution of computers to output growth. Although this could represent a break from the past, the large gains of the past few years may turn out to be a transitory response to unusually rapid declines in computer prices and a very robust economic environment. |
| Susan C. Lakatos and Jason Benderly | S&P
Earnings, Corporate Profits and Productivity In spite of the extraordinary combination of continued strong growth, strong profits, and low inflation, we can find little direct evidence of a "new economic age" underlying this beneficial trinity. We discern virtually nothing in the data to suggest a new era of enhanced productivity growth derived from restructuring, technological improvements, or any other shift in economic fundamentals. Rather, we find that strength in profits and productivity results from the unusual pattern of economic growth during this cycle, not from any fundamental shift in the relationship between economic growth and productivity. |
| Roy H. Webb | The
Statistics Corner: National Productivity Statistics This issue of The Statistics Corner is excerpted from an excellent article written by Roy H. Webb in the Federal Reserve Bank of Richmond Economic Quarterly, Winter 1998, pp.45-64, on National Productivity Statistics. We have selected the sections that review definitions of productivity commonly used in the United States and his discussion covering potential pitfalls in using productivity statistics. The views and opinions expressed in this article are the authors's and should not be attributed to the Federal Reserve Bank of Richmond or the Federal Reserve System. The entire article can be found on line at www.rich.frb.org/eq —Maurine Haver, Editor, The Statistics Corner. |
| Applied Economics | |
| Robert G. Murphy | Accounting
for the Recent Decline in NAIRU The unemployment rate associated with stable inflation, the so-called "NAIRU," probably has declined in recent years for the United States, after having risen sharply during the late 1970s and early 1980s. Although a demographic shift toward a less experienced workforce and an unexpected slowing in trend productivity growth are able to explain the earlier rise in the NAIRU, a reversal of these effects does not adequately explain the timing of the apparent decline in the NAIRU during the 1990s. This paper proposes that the NAIRU has declined recently as a result of improved efficiencies in labor markets. Regional labor markets across the United States appear to have become more integrated, leading to greater synchronization in the pattern of regional labor-market and regional business-cycle conditions. The paper provides evidence of this greater synchronization and suggests that it may have led to a drift downward in the NAIRU. |
| Loren Williams | Revenue
Management: Microeconomics and Business Modeling Revenue Management (RM) had its origins in the newly deregulated world of the airline industry of the early 1980s and has since found its way into all sectors of the travel industry, as well as freight, media, utilities and retail trade. It has been credited with billions of dollars of increased revenue and earnings during the past decade and a half. RM provides its results by designing and constructing computable economic models of the business environment in which the company operates. A general framework that is used to describe RM models is presented and several examples of specific RM models, drawn from a variety of industries, are described. |
| Daniel Hodes, Kiran Duwadi and Andrew Wise | Cable's
Expanding Role in Telecommunications The cable television industry is positioned to grow into an expanding role in telecommunications, aided by deregulation and new technology. It will continue to be the dominant provider in a growing video services sector, become a significant provider of Internet access to residential customers, and, in some locations, become an important competitor in the market for residential phone service. The proposed AT&T-TCI merger, if completed, will stimulate cable’s entry into new markets. To realize its potential role fully, however, the cable industry must continue to reduce its debt, improve customer service in its core video business, and be willing to expand into new markets. |
| Business Economics In the Workplace | |
| Diann H. Painter | The
Business Economist at Work: Mobil Corporation The corporate economist at Mobil is located in the Corporate Treasurer’s department but serves the entire organization as an in-house consultant. Resources are outside consulting firms, extensive use of the Internet, and personal contacts. Areas of involvement include economic forecasting, scenario planning, risk management for foreign exchange and bond exposure, country risk analysis for credit decisions and supplementing country risk analysis for investment decisions. |
| Edward D. Hester | Industry
Corner: The U.S. Market for Primary and Secondary Batteries Batteries are essentially stand-alone power sources that allow users to obtain electrical energy without the inconvenience of a cord, power socket or generator. Batteries can be configured in an array of sizes able to produce a broad range of energy output. Aggregate U.S. battery demand is projected to increase 6.6 percent per year through the year 2002 to $12.5 billion, slower than recent historical performance but satisfactory for such a well-established product. Secondary demand will grow faster than primary because of growth in portable computers and next-generation personal communications devices, and, potentially, electric vehicles. U.S. shipments of primary and secondary batteries will increase at a slightly faster 6.7 percent per year pace through 2002 to more than $12 billion. Favorable global market prospects will be offset by sustained increases in imports, aggravated by currency fluctuations that favor Asian imports. |
| Carolyn Scott | The
Consultants' Corner |
| Robert P. Parker and C. Brian Groves | The
Statistics Producers' Corner |
| John H. Qualls | The PC Corner |
| Bruce Kratofil (Public Section) | Window on the Web |
| Book Reviews | |
|
National Association for
Business Economics |