Episodes of macroeconomic upheaval associated with monetary policy failure have provided the stage for important debates on rules versus discretion. We discuss the main features, results, commonalities, and differences in the debates that emerged after three such episodes. The modern debate was born during the Great Inflation of the 1970s and focused on both rules versus discretion and the properties of alternative rules. The middle debate originated with Henry Simons and the Chicago School during the Great Depression in the 1930s and focuses on policy uncertainty. The earliest systematic debate involved the Currency and Banking Schools in Britain in the 1820s, but, in spite the views of many of its participants and doctrinal historians, it seems to have primarily been about the degree of activism under a single rule—that of the gold standard.
{"title":"Retrospectives: On the Evolution of the Rules versus Discretion Debate in Monetary Policy","authors":"Harris Dellas, G. Tavlas","doi":"10.1257/jep.36.3.245","DOIUrl":"https://doi.org/10.1257/jep.36.3.245","url":null,"abstract":"Episodes of macroeconomic upheaval associated with monetary policy failure have provided the stage for important debates on rules versus discretion. We discuss the main features, results, commonalities, and differences in the debates that emerged after three such episodes. The modern debate was born during the Great Inflation of the 1970s and focused on both rules versus discretion and the properties of alternative rules. The middle debate originated with Henry Simons and the Chicago School during the Great Depression in the 1930s and focuses on policy uncertainty. The earliest systematic debate involved the Currency and Banking Schools in Britain in the 1820s, but, in spite the views of many of its participants and doctrinal historians, it seems to have primarily been about the degree of activism under a single rule—that of the gold standard.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45723255","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper provides historical context for the relationship between expected and realized inflation. We begin with a discussion of early theoretical thought about how inflation expectations are formed. Then, we discuss survey- and asset- based measures of inflation expectations and assess their empirical relationship with realized inflation. Expected and realized inflation are strongly correlated over long samples, but over short samples the correlations can weaken. Lastly, to better understand the subtleties of the interaction between expected and realized inflation over short-lived but important events, we provide a narrative account of the relationship during the Great Depression of the 1930s, the Great Inflation of the 1970s, the Great Recession of 2008–2009, and the recent COVID-19 pandemic. These episodes offer compelling evidence of the importance of expectations and policy regime changes in inflation dynamics.
{"title":"Expected and Realized Inflation in Historical Perspective","authors":"C. Binder, Rupal Kamdar","doi":"10.1257/jep.36.3.131","DOIUrl":"https://doi.org/10.1257/jep.36.3.131","url":null,"abstract":"This paper provides historical context for the relationship between expected and realized inflation. We begin with a discussion of early theoretical thought about how inflation expectations are formed. Then, we discuss survey- and asset- based measures of inflation expectations and assess their empirical relationship with realized inflation. Expected and realized inflation are strongly correlated over long samples, but over short samples the correlations can weaken. Lastly, to better understand the subtleties of the interaction between expected and realized inflation over short-lived but important events, we provide a narrative account of the relationship during the Great Depression of the 1930s, the Great Inflation of the 1970s, the Great Recession of 2008–2009, and the recent COVID-19 pandemic. These episodes offer compelling evidence of the importance of expectations and policy regime changes in inflation dynamics.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47379337","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
C. Corrado, J. Haskel, C. Jona-Lasinio, Massimiliano Iommi
The production of goods and services is central to understanding economies. The textbook description of a firm, typically in agriculture or manufacturing, focuses on its physical “tangible” capital (machines), labor (workers), and the state of “know-how. ” Yet real-world firms, such as Apple, Microsoft, and Google, have almost no physical capital. Instead, their main capital assets are “intangible”: software, data, design, reputation, supply-chain expertise, and R&D. We discuss investment in these knowledge-based types of capital: How to measure it; how it affects macroeconomic data on investment, rates of return, and GDP; and how it relates to growth theory and practical growth accounting. We present estimates of productivity in the US and European economies in recent decades including intangibles and discuss why, despite relatively rapid growth in intangible capital and what seems to be a modern technological revolution, productivity growth has slowed since the global financial crisis.
{"title":"Intangible Capital and Modern Economies","authors":"C. Corrado, J. Haskel, C. Jona-Lasinio, Massimiliano Iommi","doi":"10.1257/jep.36.3.3","DOIUrl":"https://doi.org/10.1257/jep.36.3.3","url":null,"abstract":"The production of goods and services is central to understanding economies. The textbook description of a firm, typically in agriculture or manufacturing, focuses on its physical “tangible” capital (machines), labor (workers), and the state of “know-how. ” Yet real-world firms, such as Apple, Microsoft, and Google, have almost no physical capital. Instead, their main capital assets are “intangible”: software, data, design, reputation, supply-chain expertise, and R&D. We discuss investment in these knowledge-based types of capital: How to measure it; how it affects macroeconomic data on investment, rates of return, and GDP; and how it relates to growth theory and practical growth accounting. We present estimates of productivity in the US and European economies in recent decades including intangibles and discuss why, despite relatively rapid growth in intangible capital and what seems to be a modern technological revolution, productivity growth has slowed since the global financial crisis.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44078233","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bart J. Bronnenberg, Jean-Pierre Dubé, C. Syverson
US companies invested over $500 billion in 2021 in intangible brand capital, over 2% of GDP. During the past decade, US companies have also been growing their internal marketing capabilities, an often overlooked source of human capital. We discuss the private and social benefits of these intangible brand capital stocks. While the private returns to companies are fairly clear, the academic literature has been divided over the social benefits and costs of advertising and promotion, the two key investment vehicles. We also discuss the implications of brand capital for measured productivity.
{"title":"Marketing Investment and Intangible Brand Capital","authors":"Bart J. Bronnenberg, Jean-Pierre Dubé, C. Syverson","doi":"10.1257/jep.36.3.53","DOIUrl":"https://doi.org/10.1257/jep.36.3.53","url":null,"abstract":"US companies invested over $500 billion in 2021 in intangible brand capital, over 2% of GDP. During the past decade, US companies have also been growing their internal marketing capabilities, an often overlooked source of human capital. We discuss the private and social benefits of these intangible brand capital stocks. While the private returns to companies are fairly clear, the academic literature has been divided over the social benefits and costs of advertising and promotion, the two key investment vehicles. We also discuss the implications of brand capital for measured productivity.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41494242","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
What is the most efficient way to respond to recessions in the labor market? To this question, policymakers on the two sides of the pond gave diametrically opposed answers during the COVID-19 crisis. In the United States, the focus was on insuring workers by increasing the generosity of unemployment insurance. In Europe, instead, policies were concentrated on saving jobs, with the expansion of short-time work programs to subsidize labor hoarding. Who got it right? In this article, we show that far from being substitutes, unemployment insurance and short-time work exhibit strong complementarities. They provide insurance to different types of workers and against different types of shocks. Short-time work can be effective at reducing socially costly layoffs against large temporary shocks, but it is less effective against more persistent shocks that require reallocation across firms and sectors. We conclude that short-time work is an important addition to the labor market policy-toolkit during recessions, to be used alongside unemployment insurance.
{"title":"Should We Insure Workers or Jobs During Recessions?","authors":"G. Giupponi, Camille Landais, Alice Lapeyre","doi":"10.1257/jep.36.2.29","DOIUrl":"https://doi.org/10.1257/jep.36.2.29","url":null,"abstract":"What is the most efficient way to respond to recessions in the labor market? To this question, policymakers on the two sides of the pond gave diametrically opposed answers during the COVID-19 crisis. In the United States, the focus was on insuring workers by increasing the generosity of unemployment insurance. In Europe, instead, policies were concentrated on saving jobs, with the expansion of short-time work programs to subsidize labor hoarding. Who got it right? In this article, we show that far from being substitutes, unemployment insurance and short-time work exhibit strong complementarities. They provide insurance to different types of workers and against different types of shocks. Short-time work can be effective at reducing socially costly layoffs against large temporary shocks, but it is less effective against more persistent shocks that require reallocation across firms and sectors. We conclude that short-time work is an important addition to the labor market policy-toolkit during recessions, to be used alongside unemployment insurance.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44661523","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper revisits why Joan Robinson turned to Karl Marx in 1942 and which insights from Marxian economics she sought to incorporate into her later works, while commenting on how her encounter with Marx was received by some her of contemporaries. By the end of the 1930s, Robinson wanted to bring academic and Marxian economics together in a search for a more realist theory of the rate of profit and income distribution, along with clarifications on Keynes’s concept of full employment and the nature of technical progress and a long-period theory within the Keynesian framework. The result, An Essay on Marxian Economics (1942), was her most important work in terms of laying the foundations of her enduring challenge to the orthodox economics. Here she relied on Marxian insights to escape Marshallian orthodoxy. It is the story of how the originator of imperfect competition pushed further into a theory of exploitation.
{"title":"Retrospectives: Joan Robinson on Karl Marx: “His Sense of Reality Is Far Stronger”","authors":"Carolina Alves","doi":"10.1257/jep.36.2.247","DOIUrl":"https://doi.org/10.1257/jep.36.2.247","url":null,"abstract":"This paper revisits why Joan Robinson turned to Karl Marx in 1942 and which insights from Marxian economics she sought to incorporate into her later works, while commenting on how her encounter with Marx was received by some her of contemporaries. By the end of the 1930s, Robinson wanted to bring academic and Marxian economics together in a search for a more realist theory of the rate of profit and income distribution, along with clarifications on Keynes’s concept of full employment and the nature of technical progress and a long-period theory within the Keynesian framework. The result, An Essay on Marxian Economics (1942), was her most important work in terms of laying the foundations of her enduring challenge to the orthodox economics. Here she relied on Marxian insights to escape Marshallian orthodoxy. It is the story of how the originator of imperfect competition pushed further into a theory of exploitation.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44257834","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Given mounting evidence on the negative impact of early-life shocks for the wellbeing of people over the life course, a growing economics literature studies whether early-life policies have symmetric positive effects. This paper zooms in on research on this topic from the Nordic countries, where all families have access to a comprehensive set of early-life health programs, including prenatal, maternity, and well-infant care. I describe this Nordic model of universal early-life health policies and discuss the existing evidence on its causal effects from two categories of studies. First, studying the introduction of universal policies, research has documented important short- and long-run benefits for the health, education, and labor market trajectories of treated cohorts. Second, exploiting modern-day changes to policy design, research for now documents short- and medium-run impacts of universal care on primarily maternal and child health as well as parental investment behaviors. I conclude with directions for future research.
{"title":"Universal Early-Life Health Policies in the Nordic Countries","authors":"Miriam Wüst","doi":"10.1257/jep.36.2.175","DOIUrl":"https://doi.org/10.1257/jep.36.2.175","url":null,"abstract":"Given mounting evidence on the negative impact of early-life shocks for the wellbeing of people over the life course, a growing economics literature studies whether early-life policies have symmetric positive effects. This paper zooms in on research on this topic from the Nordic countries, where all families have access to a comprehensive set of early-life health programs, including prenatal, maternity, and well-infant care. I describe this Nordic model of universal early-life health policies and discuss the existing evidence on its causal effects from two categories of studies. First, studying the introduction of universal policies, research has documented important short- and long-run benefits for the health, education, and labor market trajectories of treated cohorts. Second, exploiting modern-day changes to policy design, research for now documents short- and medium-run impacts of universal care on primarily maternal and child health as well as parental investment behaviors. I conclude with directions for future research.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46601352","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The essay considers the claim that slavery played a leading role in the acceleration of US economic growth in the nineteenth century. Although popular among pro-slavery apologists, the proposition fails under rigorous historical scrutiny. The slave South discouraged immigration, underinvested in transportation infrastructure, and failed to educate the majority of its population. It is not even clear that the region produced more cotton than it would have under a counterfactual alternative settlement by free family farmers, on the free-state pattern. The grain of truth in recently popular narratives is that many northerners and business interests were complicit in the crime of slavery: routinely engaging in transactions with slaveholders, even promoting activities that facilitated slavery and the domestic slave trade. Complicity complicates simple historical moralism, but it is quite different from the notion that the prosperity of the nation as a whole derived from slavery in any fundamental way.
{"title":"Slavery and the Rise of the Nineteenth-Century American Economy","authors":"Gavin Wright","doi":"10.1257/jep.36.2.123","DOIUrl":"https://doi.org/10.1257/jep.36.2.123","url":null,"abstract":"The essay considers the claim that slavery played a leading role in the acceleration of US economic growth in the nineteenth century. Although popular among pro-slavery apologists, the proposition fails under rigorous historical scrutiny. The slave South discouraged immigration, underinvested in transportation infrastructure, and failed to educate the majority of its population. It is not even clear that the region produced more cotton than it would have under a counterfactual alternative settlement by free family farmers, on the free-state pattern. The grain of truth in recently popular narratives is that many northerners and business interests were complicit in the crime of slavery: routinely engaging in transactions with slaveholders, even promoting activities that facilitated slavery and the domestic slave trade. Complicity complicates simple historical moralism, but it is quite different from the notion that the prosperity of the nation as a whole derived from slavery in any fundamental way.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46499504","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Two major procedures for establishing the monetary value of a plan for reparations for Black American descendants of US slavery are considered in this paper: 1) Enumeration of atrocities and assignment of a dollar value to each as a prelude to adding up the total, and 2) Identification of a summary measure that captures the dollar amount of the cumulative, intergenerational effects of anti-Black atrocities. Under the first approach, the itemization strategy, we assess wage costs to the enslaved of bondage; financial gains to the perpetrators of slavery; damages to Black victims of post-Civil War white massacres and lynchings; losses from discrimination in the provision of the home buying supports from the Federal Housing Administration and the G.I. Bill; and income penalties due to racial discrimination in employment. Under the second approach, the global indicator strategy, we calculate the present value of providing 40 acres of land to freed slaves in 1865 and the current wealth gap between Black and White Americans. We conclude that the latter standard, the racial wealth gap, provides the best gauge for the size of the bill for Black reparations.
{"title":"The Cumulative Costs of Racism and the Bill for Black Reparations","authors":"W. Darity, A. Mullen, Marvin Slaughter","doi":"10.1257/jep.36.2.99","DOIUrl":"https://doi.org/10.1257/jep.36.2.99","url":null,"abstract":"Two major procedures for establishing the monetary value of a plan for reparations for Black American descendants of US slavery are considered in this paper: 1) Enumeration of atrocities and assignment of a dollar value to each as a prelude to adding up the total, and 2) Identification of a summary measure that captures the dollar amount of the cumulative, intergenerational effects of anti-Black atrocities. Under the first approach, the itemization strategy, we assess wage costs to the enslaved of bondage; financial gains to the perpetrators of slavery; damages to Black victims of post-Civil War white massacres and lynchings; losses from discrimination in the provision of the home buying supports from the Federal Housing Administration and the G.I. Bill; and income penalties due to racial discrimination in employment. Under the second approach, the global indicator strategy, we calculate the present value of providing 40 acres of land to freed slaves in 1865 and the current wealth gap between Black and White Americans. We conclude that the latter standard, the racial wealth gap, provides the best gauge for the size of the bill for Black reparations.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46414312","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper reconsiders the evidence needed to answer pressing questions of economic history and racial inequality, the Third Phase of research on American Enslavement and its Aftermath. First, I briefly summarize how economists have sought to understand slavery as an institution. Second, using my family’s narrative as a lens, I show how answers to questions from economic history and economic theory can be answered by expanding our evidentiary base and methodological approaches. In the process, I highlight some areas of what these “traditional” economic perspectives miss. Finally, I briefly provide some examples from other fields—such as recent work by historians—that have sought to provide texture on some of the key dimensions of slavery and racial inequality that have been under-studied by economists.
{"title":"American Enslavement and the Recovery of Black Economic History","authors":"Trevon Logan","doi":"10.1257/jep.36.2.81","DOIUrl":"https://doi.org/10.1257/jep.36.2.81","url":null,"abstract":"This paper reconsiders the evidence needed to answer pressing questions of economic history and racial inequality, the Third Phase of research on American Enslavement and its Aftermath. First, I briefly summarize how economists have sought to understand slavery as an institution. Second, using my family’s narrative as a lens, I show how answers to questions from economic history and economic theory can be answered by expanding our evidentiary base and methodological approaches. In the process, I highlight some areas of what these “traditional” economic perspectives miss. Finally, I briefly provide some examples from other fields—such as recent work by historians—that have sought to provide texture on some of the key dimensions of slavery and racial inequality that have been under-studied by economists.","PeriodicalId":15611,"journal":{"name":"Journal of Economic Perspectives","volume":null,"pages":null},"PeriodicalIF":8.4,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41649960","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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