Are Cyclical Fluctuations in Productivity Due More to Supply Shocks or Demand Shocks?

Measured productivity is strongly procyclical. Real business cycle theories suggest that actual fluctuations in productivity are the source of fluctuations in aggregate output. Keynesian theories maintain that fluctuations in aggregate output come from shocks to aggregate demand. Keynesian theories appeal to labor hoarding or off the production function behavior to explain the procyclicality of productivity. If observed productivity shocks are true productivity shocks, a function of factor prices should covary exactly with productivity. In annual data for U.S. industries, that function of factor prices and conventionally-measured productivity move together very closely. Moreover, their difference is uncorrelated with aggregate output.

The Effects of the Financial Crisis on the Well-Being of Older Americans: Evidence from the Cognitive Economics Study

This paper uses the Cognitive Economics Study (CogEcon) to assess the effect of the financial crisis on the well-being of older Americans. Financial wealth fell by about 15 percent for the median household. These financial losses were concentrated among households with high levels of wealth and high cognitive capacities, who tend to have higher exposure to the stock market. Nonetheless, households with little financial wealth suffered declines in well-being-measured by declines in consumption-as large on average as households with substantial exposure to the stock market. Tight credit market conditions and adverse labor market outcomes account for much of the effect of the financial crisis on the consumption of these low-wealth households.

The Stabilization of the U.S. Economy Evidence From the Stock Market

Until recently, economists widely believed that economic activity had become less variable in the United States following the end of World War II. Challenging this belief, new research suggests that key historical time series are spuriously volatile, a finding that is highly controversial. Data from the stock market may provide a vehicle for resolving the controversy. Economic theory relates stock prices to real activity; empirical tests also show a strong link between stock prices and activity. Financial data are accurately measured over long spans of time and hence are free of most of the measurement problems in other time series. Measures of stock prices show no stabilization in the post-World War II period relative to the pre-World War I or pre-Depression periods. These stock market data thus support the hypothesis that real activity has not been stabilized.

Measuring Market Power in U.S. Industry

Non-competitive conduct can be assessed by estimating the size of the markup or Lerner index achieved in a market. The markup implies a price elasticity of demand faced by the representative firm. For a given markup, non-competitive conduct is greater the more elastic is the market elasticity of demand. The ratio of the firm's to the market elasticity is a measure of non-competitive conduct that is insensitive to the value of the monopoly. To implement this measure, both the firm's and the market elasticities of demand must be estimated. Hall shows how to estimate the markup, and hence the elasticity faced by the firm, from the cyclical behavior of productivity. To estimate the market elasticity, an instrumental variables procedure exploiting a covariance restriction between productivity shocks and demand shocks is used. Results for broad sectors of private industry and for non-durable manufacturing industries display a wide range of monopoly power.

Supply Shocks in Macroeconomics

Supply shocks played an important role in macroeconomic fluctuations during the 1970's. Supply shocks are also increasingly important in Keynesian and neo-classical models of the business cycle. This paper is a short survey of these theoretical models. It also discusses the history of supply shocks in recent business cycles.

Capital Utilization and Capital Accumulation: Theory and Evidence

A firm may acquire additional caoital input by purchasing new capital or by increasing the utilization of its current capital. The margin between capital accumulation and capital utilization is studied in a model of dynamic factor demand where the firm chooses capital, labor, and their rates of utilization. A direct measure of capital utilization --the workweek of capital--is incorporated into the theory and estimates. The estimates imply that capital stock is costly to adjust while the work week of capital is essentially costless to adjust. The estimated response of the capital stock to changes in its price and in the required rate of return is more rapid than found in other estimates.

Quality Improvement in Health Care: A Framework for Price and Output Measurement

The durability of health care treatment, the substantial technical change in health care treatment, and the prevalence of third-party payment interact to create substantial difficulty in measuring the price and output of health care. This paper provides a framework for analyzing the demand for health care taking into account these difficulties. It then suggests how this framework might be used to improve measurement of health care prices and output.

Photoassociation adiabatic passage of ultracold Rb atoms to form ultracold Rb_2 molecules

We theoretically explore photoassociation by Adiabatic Passage of two colliding cold ^{85}Rb atoms in an atomic trap to form an ultracold Rb_2 molecule. We consider the incoherent thermal nature of the scattering process in a trap and show that coherent manipulations of the atomic ensemble, such as adiabatic passage, are feasible if performed within the coherence time window dictated by the temperature, which is relatively long for cold atoms. We show that a sequence of ~2*10^7 pulses of moderate intensities, each lasting ~750 ns, can photoassociate a large fraction of the atomic ensemble at temperature of 100 microkelvin and density of 10^{11} atoms/cm^3. Use of multiple pulse sequences makes it possible to populate the ground vibrational state. Employing spontaneous decay from a selected excited state, one can accumulate the molecules in a narrow distribution of vibrational states in the ground electronic potential. Alternatively, by removing the created molecules from the beam path between pulse sets, one can create a low-density ensemble of molecules in their ground ro-vibrational state.Comment: RevTex, 23 pages, 9 figure