This paper provides the most careful and clearheaded study to date of the factor distribution of income in the United States. Its most important contribution is the introduction of a new concept, “factorless income,” which is the residual after assigning aggregate income to labor and capital. Unlike many other studies, which simply assume that factorless income corresponds to either economic profit, unmeasured capital, or a return premium, this paper is agnostic and entertains all three possibilities. It turns out that none of the three is a perfect match for the data, but economic profit is a particularly ill-fitting explanation. This calls into question some recent work on rising markups in the United States, and I suspect that Karabarbounis andNeiman’s critique will quickly become central to the literature. The following comment has two parts. First, I will provide my own brief tour of factor income trends in the United States, covering much of the same territory as Karabarbounis and Neiman but in a cursory and simplifiedway. Second, I will discuss the paper’s key contributions, especially its rejection of “case P,” the interpretation of factorless income as economic profit. I conclude that the paper is quite successful inmaking its case, and that futurework should build upon it by combining the paper’s three cases, with a special emphasis on “case R,” the discrepancy between interest rates and the rate of return on capital.
{"title":"Comment","authors":"Matthew Rognlie","doi":"10.1086/700903","DOIUrl":"https://doi.org/10.1086/700903","url":null,"abstract":"This paper provides the most careful and clearheaded study to date of the factor distribution of income in the United States. Its most important contribution is the introduction of a new concept, “factorless income,” which is the residual after assigning aggregate income to labor and capital. Unlike many other studies, which simply assume that factorless income corresponds to either economic profit, unmeasured capital, or a return premium, this paper is agnostic and entertains all three possibilities. It turns out that none of the three is a perfect match for the data, but economic profit is a particularly ill-fitting explanation. This calls into question some recent work on rising markups in the United States, and I suspect that Karabarbounis andNeiman’s critique will quickly become central to the literature. The following comment has two parts. First, I will provide my own brief tour of factor income trends in the United States, covering much of the same territory as Karabarbounis and Neiman but in a cursory and simplifiedway. Second, I will discuss the paper’s key contributions, especially its rejection of “case P,” the interpretation of factorless income as economic profit. I conclude that the paper is quite successful inmaking its case, and that futurework should build upon it by combining the paper’s three cases, with a special emphasis on “case R,” the discrepancy between interest rates and the rate of return on capital.","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"60 11","pages":""},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138495558","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}
Kerwin Kofi Charles, Erik Hurst, and Mariel Schwartz provide an insightful and comprehensive empirical examination of the link between the transformation of the US manufacturing sector and the substantial decline in the employment rates and average annual hours worked of prime-age adults (those aged 21–55), especially men and less educated women, since 2000. Charles et al. document that US manufacturing experienced a massive decline in employment of 5 million jobs, a large increase in capital intensity, and substantial skill upgrading from 2000 to 2017. They exploit geographic variation in manufacturing employment decline across commuting zones (CZs) in the 2000s using a Bartik (shiftshare) instrument to assess the “causal” impact of local manufacturing employment demand shocks on employment outcomes. Charles et al.find that CZs with larger manufacturing employment declines have larger declines in employment rates, hours worked, and wages for prime-age workers from2000 to 2016, regardless ofwhether the adversemanufacturing shocks were related to China trade shocks or other sources. Charles et al. conclude that manufacturing decline can account for about half of the prime-agemale employment rate decline since 2000. Geographic areas with bigger manufacturing employment losses in the 2000s also experience greater social problems as seen in more severe drug and opioid addiction problems. Finally, Charles et al. show that adversemanufacturing employment shocks have generated less geographicmobility (less of a regional migration response) and more persistent impacts on employment rates in the 2000s than in the 1980s. I find the analysis of Charles et al. to bewell crafted and quite convincing. Their findings of adverse labor demand shocks against less educated workers being a driving force in declining employment rates in the 2000s complement other work using cross-area variation in China trade exposure (Autor, Dorn, and Hanson 2013) and automation shocks
{"title":"Comment","authors":"Lawrence F. Katz","doi":"10.1086/700906","DOIUrl":"https://doi.org/10.1086/700906","url":null,"abstract":"Kerwin Kofi Charles, Erik Hurst, and Mariel Schwartz provide an insightful and comprehensive empirical examination of the link between the transformation of the US manufacturing sector and the substantial decline in the employment rates and average annual hours worked of prime-age adults (those aged 21–55), especially men and less educated women, since 2000. Charles et al. document that US manufacturing experienced a massive decline in employment of 5 million jobs, a large increase in capital intensity, and substantial skill upgrading from 2000 to 2017. They exploit geographic variation in manufacturing employment decline across commuting zones (CZs) in the 2000s using a Bartik (shiftshare) instrument to assess the “causal” impact of local manufacturing employment demand shocks on employment outcomes. Charles et al.find that CZs with larger manufacturing employment declines have larger declines in employment rates, hours worked, and wages for prime-age workers from2000 to 2016, regardless ofwhether the adversemanufacturing shocks were related to China trade shocks or other sources. Charles et al. conclude that manufacturing decline can account for about half of the prime-agemale employment rate decline since 2000. Geographic areas with bigger manufacturing employment losses in the 2000s also experience greater social problems as seen in more severe drug and opioid addiction problems. Finally, Charles et al. show that adversemanufacturing employment shocks have generated less geographicmobility (less of a regional migration response) and more persistent impacts on employment rates in the 2000s than in the 1980s. I find the analysis of Charles et al. to bewell crafted and quite convincing. Their findings of adverse labor demand shocks against less educated workers being a driving force in declining employment rates in the 2000s complement other work using cross-area variation in China trade exposure (Autor, Dorn, and Hanson 2013) and automation shocks","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"373 - 379"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700906","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44905398","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}
where the franchise value is the difference between the fair and book value of bank equity. The franchise value is positive when banks can increase the value of their assets above their costs, as captured by the book value, or when banks have a funding advantage. A clever application of a standard valuation technique in finance, the Gordon growthmodel, allows the authors to calculate the model-implied market-to-book ratio and the franchise value of the aggregate US banking sector. The inputs to the model are simply a discount rate, the cash flow to bank equity, and a cash flow growth rate. This method is accurate as long as its inputs accurately capture the cash flow process, the risk, and the opportunity cost of capital for bank equity investors. Using bank accounting data and corporate excess return data, the authors calculate banks’model implied franchise value and market-to-book ratio, that is, two of the three terms in the above equation. They conclude that the reduction in bank market valuation is primarily due to a reduction in the value of government guarantees. In my comments, I first present a simplified version of the valuation method to highlight the authors’ key assumptions. Second, I present evidence that banks are exposed to interest rate risk, leading me to argue that interest rate risk should be taken into account for amore compelling
{"title":"Comment","authors":"Juliane Begenau","doi":"10.1086/700900","DOIUrl":"https://doi.org/10.1086/700900","url":null,"abstract":"where the franchise value is the difference between the fair and book value of bank equity. The franchise value is positive when banks can increase the value of their assets above their costs, as captured by the book value, or when banks have a funding advantage. A clever application of a standard valuation technique in finance, the Gordon growthmodel, allows the authors to calculate the model-implied market-to-book ratio and the franchise value of the aggregate US banking sector. The inputs to the model are simply a discount rate, the cash flow to bank equity, and a cash flow growth rate. This method is accurate as long as its inputs accurately capture the cash flow process, the risk, and the opportunity cost of capital for bank equity investors. Using bank accounting data and corporate excess return data, the authors calculate banks’model implied franchise value and market-to-book ratio, that is, two of the three terms in the above equation. They conclude that the reduction in bank market valuation is primarily due to a reduction in the value of government guarantees. In my comments, I first present a simplified version of the valuation method to highlight the authors’ key assumptions. Second, I present evidence that banks are exposed to interest rate risk, leading me to argue that interest rate risk should be taken into account for amore compelling","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"146 - 156"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700900","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45193784","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}
Any well-trained economist is tempted to say that this question is not well posed, or that neither statement is really true, or something like that. But this is meant to be a psychological gauge of one’s predispositions, not an analytic exercise. So humor me and write down your answer. I will get back to it in a minute. Now, back to border taxes. There is no doubt in my mind that the broad issue addressed in this paper is an important one. In Washington policy circles, a common argument is that Europe’s value-added taxes (VATs) are adverse to American trade interests. After all, the European VAT taxes imports and exempts exports. From the mercantilist perspective that (unfortunately) dominates public discussion of trade, what could be worse that a policy that encourages American imports and hurts American exports? Needless to say, Washington policy circles are not dominated by PhD economists steeped in general equilibrium theory and the Lerner symmetry theorem. I recall one conversation I had about this issue with a colleague when I worked in the Bush administration. He was not an economist, but rather an Ivy League-educated lawyer. He was a smart guy with a lot of experience in the policy and politics of international trade negotiations. I told him that economists don’t view value added taxes thatway, that equilibrium exchange rates adjust to ensure that these border taxes do not impede trade. I recall his response: “Yeah, I have had a lot of econ-
{"title":"Comment","authors":"N. Mankiw","doi":"10.1086/700909","DOIUrl":"https://doi.org/10.1086/700909","url":null,"abstract":"Any well-trained economist is tempted to say that this question is not well posed, or that neither statement is really true, or something like that. But this is meant to be a psychological gauge of one’s predispositions, not an analytic exercise. So humor me and write down your answer. I will get back to it in a minute. Now, back to border taxes. There is no doubt in my mind that the broad issue addressed in this paper is an important one. In Washington policy circles, a common argument is that Europe’s value-added taxes (VATs) are adverse to American trade interests. After all, the European VAT taxes imports and exempts exports. From the mercantilist perspective that (unfortunately) dominates public discussion of trade, what could be worse that a policy that encourages American imports and hurts American exports? Needless to say, Washington policy circles are not dominated by PhD economists steeped in general equilibrium theory and the Lerner symmetry theorem. I recall one conversation I had about this issue with a colleague when I worked in the Bush administration. He was not an economist, but rather an Ivy League-educated lawyer. He was a smart guy with a lot of experience in the policy and politics of international trade negotiations. I told him that economists don’t view value added taxes thatway, that equilibrium exchange rates adjust to ensure that these border taxes do not impede trade. I recall his response: “Yeah, I have had a lot of econ-","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"468 - 471"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700909","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45023592","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}
Andrew Atkeson pointed out that rural-to-urban transitions are typically associated with a selection effect. Those who leave early are more skilled and adaptable. As time goes by, thosewho haven’tmigrated are less likely to transition to a different job and remain in place. Atkeson askedwhether the same phenomenon is at play in the United States. The authors mentioned that mobility among the young is usually an important margin of adjustment. They noted that a striking feature of the data is that the young aren’t moving out with the same propensity as in the past. Several participants offered comments and formulated conjectures regarding the possible causes for the lack of mobility. Richard Rogerson shared Atkeson’s view that selection might play an important role. Rogerson suggested that migration of skilled workers out of manufacturing towns leads to a collapse of the tax base and a deterioration in the provision of services. Guido Lorenzoni noted that relocating is an investment activity. As such, the return on this investment is crucial for geographic mobility. Lorenzoni inquired about the evidence on the returns to moving out of manufacturing towns. Robert Gordon argued workers may not be able to pay the costs ofmoving simply because their wages are too low. Gordon pushed back on the idea that land-use regulation is an impediment for mobility, an idea that was raised by both discussants. He reminded the audience that most population growth in the United States is in large flat areas, which do not have exorbitant real estate prices. Valerie Ramey joined the discussion and referred to Michael W. L. Elsby and Matthew D. Shapiro (“Why Does Trend Growth Affect Equilibrium Employment? A New Explanation of an Old Puzzle,” American Economic Review 102, no. 4: 1378–1413). Their work emphasizes the role of labor productivity growth for the decline in labor mobility. When labor productivity growth is low, as it currently is, workers are not willing to move away for low-wage jobs.
Andrew Atkeson指出，农村向城市的转变通常与选择效应有关。那些提前离开的人更熟练，适应能力更强。随着时间的推移，那些没有移民的人不太可能转换到另一份工作并留在原地。阿特克森问美国是否也存在同样的现象。作者提到，年轻人的流动性通常是一个重要的调整幅度。他们指出，数据的一个显著特点是，年轻人搬出去的倾向与过去不同。一些与会者就缺乏流动性的可能原因提出了意见和推测。Richard Rogerson赞同Atkeson的观点，即选拔可能发挥重要作用。罗杰森认为，技术工人从制造业城镇迁出会导致税基崩溃和服务提供恶化。Guido Lorenzoni指出，搬迁是一项投资活动。因此，这项投资的回报对地域流动性至关重要。洛伦佐尼询问了从制造业城镇迁出的证据。罗伯特·戈登认为，工人们可能无法仅仅因为工资太低而支付搬家费用。戈登反驳了土地使用监管阻碍流动的观点，这一观点是由两位讨论者提出的。他提醒观众，美国大多数人口增长都在大面积的平坦地区，那里没有过高的房地产价格。Valerie Ramey加入了讨论，并提到了Michael W.L.Elsby和Matthew D.Shapiro（“为什么趋势增长影响均衡就业？一个老难题的新解释”，《美国经济评论》102，第4期：1378-1413）。他们的工作强调了劳动生产率增长对劳动力流动性下降的作用。当劳动生产率增长率像目前这样低时，工人们不愿意离开去从事低工资的工作。
{"title":"Discussion","authors":"A. Atkeson","doi":"10.1086/700914","DOIUrl":"https://doi.org/10.1086/700914","url":null,"abstract":"Andrew Atkeson pointed out that rural-to-urban transitions are typically associated with a selection effect. Those who leave early are more skilled and adaptable. As time goes by, thosewho haven’tmigrated are less likely to transition to a different job and remain in place. Atkeson askedwhether the same phenomenon is at play in the United States. The authors mentioned that mobility among the young is usually an important margin of adjustment. They noted that a striking feature of the data is that the young aren’t moving out with the same propensity as in the past. Several participants offered comments and formulated conjectures regarding the possible causes for the lack of mobility. Richard Rogerson shared Atkeson’s view that selection might play an important role. Rogerson suggested that migration of skilled workers out of manufacturing towns leads to a collapse of the tax base and a deterioration in the provision of services. Guido Lorenzoni noted that relocating is an investment activity. As such, the return on this investment is crucial for geographic mobility. Lorenzoni inquired about the evidence on the returns to moving out of manufacturing towns. Robert Gordon argued workers may not be able to pay the costs ofmoving simply because their wages are too low. Gordon pushed back on the idea that land-use regulation is an impediment for mobility, an idea that was raised by both discussants. He reminded the audience that most population growth in the United States is in large flat areas, which do not have exorbitant real estate prices. Valerie Ramey joined the discussion and referred to Michael W. L. Elsby and Matthew D. Shapiro (“Why Does Trend Growth Affect Equilibrium Employment? A New Explanation of an Old Puzzle,” American Economic Review 102, no. 4: 1378–1413). Their work emphasizes the role of labor productivity growth for the decline in labor mobility. When labor productivity growth is low, as it currently is, workers are not willing to move away for low-wage jobs.","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"389 - 393"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700914","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48386910","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}
I salute the authors’ endeavor to usemarket price to examine the riskiness of the financial system and to evaluate the change in the subsidy represented by government guarantees. As illustrated by my work with Natasha Sarin (Sarin and Summers 2016), which the authors reference, I believe that market information is at a minimum a valuable complement to accounting information in evaluating the health of banks. I would guess that their broad conclusion—that if a crisis like 2008 were to happen again,wewould have insolvent banks—is correct. And I find it plausible that, as the authors believe, a combination of more regulatory capital, establishment of resolution procedures, and official commitments to move beyond too-big-to-fail have reduced the market’s perception of implicit guarantees. That said, I have to report that I’m almost entirely unconvinced by any of the authors’ estimates and believe that all reflect arbitrary and in some cases implausible modeling assumptions. I do not believe they have any real basis for their claims about the extent to which declining franchise value, as opposed to capitalized government subsidies, is responsible for banks’ lowmarket-to-book equity ratios. It’s not that I have clearly different views than the authors, just that I do not believe their measurements are convincing. First, there are some real questions about the theory of subsidies that are raised by the kind of analysis that is done here. Let’s imagine that the government decided to subsidize ice cream cones for all companies that sold ice cream cones. What would we expect? I think we would expect that there would be lower-priced ice cream cones. I think we would expect that the quantity of ice cream cones sold would go up. I think we would expect no change in the Q ratio of ice cream cone companies, if this was a competitive industry. If ice cream cones, and the production of ice cream cones, involved investment that took place with adjustment costs,
{"title":"Comment","authors":"L. Summers","doi":"10.1086/700901","DOIUrl":"https://doi.org/10.1086/700901","url":null,"abstract":"I salute the authors’ endeavor to usemarket price to examine the riskiness of the financial system and to evaluate the change in the subsidy represented by government guarantees. As illustrated by my work with Natasha Sarin (Sarin and Summers 2016), which the authors reference, I believe that market information is at a minimum a valuable complement to accounting information in evaluating the health of banks. I would guess that their broad conclusion—that if a crisis like 2008 were to happen again,wewould have insolvent banks—is correct. And I find it plausible that, as the authors believe, a combination of more regulatory capital, establishment of resolution procedures, and official commitments to move beyond too-big-to-fail have reduced the market’s perception of implicit guarantees. That said, I have to report that I’m almost entirely unconvinced by any of the authors’ estimates and believe that all reflect arbitrary and in some cases implausible modeling assumptions. I do not believe they have any real basis for their claims about the extent to which declining franchise value, as opposed to capitalized government subsidies, is responsible for banks’ lowmarket-to-book equity ratios. It’s not that I have clearly different views than the authors, just that I do not believe their measurements are convincing. First, there are some real questions about the theory of subsidies that are raised by the kind of analysis that is done here. Let’s imagine that the government decided to subsidize ice cream cones for all companies that sold ice cream cones. What would we expect? I think we would expect that there would be lower-priced ice cream cones. I think we would expect that the quantity of ice cream cones sold would go up. I think we would expect no change in the Q ratio of ice cream cone companies, if this was a competitive industry. If ice cream cones, and the production of ice cream cones, involved investment that took place with adjustment costs,","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"157 - 162"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700901","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44875269","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}
NBER’s 33rd Annual Conference on Macroeconomics brought together leading scholars to present, discuss, and debate six research papers on central issues in contemporary macroeconomics. In addition, Ragu Rajan, former governor of the Reserve Bank of India and former chief economist and director of research at the International Monetary Fund, delivered a thought-provoking after-dinner talk comparing the economic institutions in India and China and drawing out their implications for the economic growth potential of each country. Finally, we had a special panel session on the macroeconomic effects of the Tax Cuts and Jobs Act of 2017, moderated by NBER President James Poterba and featuring three leading experts in this area: Wendy Edelberg, associate director for economic analysis at the Congressional Budget Office; Kent Smetters, Boettner Chair Professor of Business Economics and Public Policy at the University of Pennsylvania’s Wharton School; and Mark Zandi, chief economist of Moody’s Analytics. Video recordings of the presentations of the papers, summaries of the papers by the authors, and the lunchtime panel discussion are all accessible on the web page of the NBER Annual Conference on Macroeconomics. These videos make a useful complement to this volume and make the content of the conference more widely accessible. This conference volume contains edited versions of the six papers presented at the conference, each followed by two written comments by leading scholars and a summary discussion of the debates that followed each paper. The first paper in this year’s volume takes an important step in understanding the implications of an assumption that is commonly used in mainstreammacromodels: people routinely solve extremely complicated, infinite-horizon planning problems. This assumption is clearly wrong. So a key question is, When does this assumption lead to misleading con-
{"title":"Editorial","authors":"M. Eichenbaum, J. Parker","doi":"10.1086/700891","DOIUrl":"https://doi.org/10.1086/700891","url":null,"abstract":"NBER’s 33rd Annual Conference on Macroeconomics brought together leading scholars to present, discuss, and debate six research papers on central issues in contemporary macroeconomics. In addition, Ragu Rajan, former governor of the Reserve Bank of India and former chief economist and director of research at the International Monetary Fund, delivered a thought-provoking after-dinner talk comparing the economic institutions in India and China and drawing out their implications for the economic growth potential of each country. Finally, we had a special panel session on the macroeconomic effects of the Tax Cuts and Jobs Act of 2017, moderated by NBER President James Poterba and featuring three leading experts in this area: Wendy Edelberg, associate director for economic analysis at the Congressional Budget Office; Kent Smetters, Boettner Chair Professor of Business Economics and Public Policy at the University of Pennsylvania’s Wharton School; and Mark Zandi, chief economist of Moody’s Analytics. Video recordings of the presentations of the papers, summaries of the papers by the authors, and the lunchtime panel discussion are all accessible on the web page of the NBER Annual Conference on Macroeconomics. These videos make a useful complement to this volume and make the content of the conference more widely accessible. This conference volume contains edited versions of the six papers presented at the conference, each followed by two written comments by leading scholars and a summary discussion of the debates that followed each paper. The first paper in this year’s volume takes an important step in understanding the implications of an assumption that is commonly used in mainstreammacromodels: people routinely solve extremely complicated, infinite-horizon planning problems. This assumption is clearly wrong. So a key question is, When does this assumption lead to misleading con-","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"xi - xvii"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700891","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42453590","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 ingenious paper by Koslowski, Veldkamp, and Venkateswaran develops a model with two main components. The first is rooted in the financial economics of asset pricing. It describes amechanism linking bad financial experiences to lengthy periods of low riskless interest rates. The second is rooted in corporate finance. It considers features of financial institutions and markets that explain why safe assets enjoy a larger increase in value in bad times than is captured in standard asset pricing models. I will start by exploring the simple two-period, two-state Lucas (1978) model of asset pricing to develop a sense of the challenges in understanding the pricing of risky and riskless assets. Investor households receive 1 unit of endowment to consume now and a random endowment with two possible values to consume in the future, c1 and c2 in states 1 and 2. State 1 is normal and state 2 is a disasterwith considerably lower consumption. The probabilities of the two consumption levels are 1 p and p, respectively. These two values of possible consumption are constrained so that expected consumption growth is at a designated rate g:
{"title":"Comment","authors":"R. Hall","doi":"10.1086/700905","DOIUrl":"https://doi.org/10.1086/700905","url":null,"abstract":"This ingenious paper by Koslowski, Veldkamp, and Venkateswaran develops a model with two main components. The first is rooted in the financial economics of asset pricing. It describes amechanism linking bad financial experiences to lengthy periods of low riskless interest rates. The second is rooted in corporate finance. It considers features of financial institutions and markets that explain why safe assets enjoy a larger increase in value in bad times than is captured in standard asset pricing models. I will start by exploring the simple two-period, two-state Lucas (1978) model of asset pricing to develop a sense of the challenges in understanding the pricing of risky and riskless assets. Investor households receive 1 unit of endowment to consume now and a random endowment with two possible values to consume in the future, c1 and c2 in states 1 and 2. State 1 is normal and state 2 is a disasterwith considerably lower consumption. The probabilities of the two consumption levels are 1 p and p, respectively. These two values of possible consumption are constrained so that expected consumption growth is at a designated rate g:","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"297 - 302"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700905","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42649597","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}
Xavier Gabaix welcomed the broader agenda to which the paper contributes and that recognizes a larger role for behavioral features in macroeconomic models. Gabaix was curious about the ability of Woodford’s model to obtain Fisher neutrality in the long run while resolving the “forward guidance puzzle.”He followed up on a point raised by Jennifer La’O during her discussion and noted that several recent papers pursue an exercise similar to Woodford’s but consider different behavioral frictions. Gabaix asked how the predictions of the model at the aggregate level differed from the ones in these papers and suggested that these alternative models should be judged in light of these predictions. Finally, he offered a broader comment about the role of bounded rationality for decisions at the micro and macro levels. According to estimates of his, the discount factor is roughly 0.85 per quarter in a macro context, suggesting a planning horizon of 2 years. Gabaix concluded that agents can be very patient at the micro level, when making professional and familial decisions, but may have a more limited attention to macro disturbances. The author pointed out that there is indeed a formal similarity between the reduced-form equations he obtained and those associated with other behavioral frictions, including sparsity in the case of Gabaix (“A Behavioral New Keynesian Model” [Working Paper, Harvard University, 2018]). He emphasized that his model differs from other contributions, not only in terms of the foundations but also in terms of predictions at the aggregate level. An important difference, he argued, is that his model resolves the issue of multiplicity of equilibria. Another difference he mentioned is that his model allows for learning dynamics. The learning component has crucial implications for long-lasting policy experiments, such as a permanent interest rate peg. On this point, the author clarified that adaptive learning of the value functions is the very mechanism that allows one to obtain Fisher neutrality in the long run,
Xavier Gabaix欢迎这篇论文为更广泛的议程做出贡献，并承认行为特征在宏观经济模型中发挥着更大的作用。Gabaix很好奇Woodford的模型在解决“前瞻指导难题”的同时，能否在长期内获得Fisher中立性。他跟进了Jennifer La 'O在讨论中提出的一个观点，并指出最近有几篇论文进行了类似于Woodford的练习，但考虑了不同的行为摩擦。Gabaix询问该模型在总体水平上的预测与这些论文中的预测有何不同，并建议应该根据这些预测来判断这些替代模型。最后，他对有限理性在微观和宏观层面决策中的作用提出了更广泛的评论。根据他的估计，在宏观背景下，贴现率约为每季度0.85，这表明规划期限为2年。Gabaix总结说，在做专业和家庭决策时，代理人在微观层面上可以非常耐心，但对宏观干扰的关注可能更有限。作者指出，他获得的简化形式方程与其他行为摩擦相关的方程之间确实存在形式相似性，包括Gabaix案例中的稀疏性(“行为新凯恩斯主义模型”[Working Paper, Harvard University, 2018])。他强调，他的模型不同于其他贡献，不仅在基础方面，而且在总体水平上的预测方面。他认为，一个重要的区别在于，他的模型解决了均衡的多重性问题。他提到的另一个不同之处在于，他的模型允许动态学习。学习部分对长期的政策实验具有关键意义，比如永久性的钉住利率。在这一点上，作者澄清了价值函数的适应性学习正是允许人们在长期内获得费雪中立性的机制。
{"title":"Discussion","authors":"A. Atkeson, Dilip Abreu, David Pearce","doi":"10.1086/700910","DOIUrl":"https://doi.org/10.1086/700910","url":null,"abstract":"Xavier Gabaix welcomed the broader agenda to which the paper contributes and that recognizes a larger role for behavioral features in macroeconomic models. Gabaix was curious about the ability of Woodford’s model to obtain Fisher neutrality in the long run while resolving the “forward guidance puzzle.”He followed up on a point raised by Jennifer La’O during her discussion and noted that several recent papers pursue an exercise similar to Woodford’s but consider different behavioral frictions. Gabaix asked how the predictions of the model at the aggregate level differed from the ones in these papers and suggested that these alternative models should be judged in light of these predictions. Finally, he offered a broader comment about the role of bounded rationality for decisions at the micro and macro levels. According to estimates of his, the discount factor is roughly 0.85 per quarter in a macro context, suggesting a planning horizon of 2 years. Gabaix concluded that agents can be very patient at the micro level, when making professional and familial decisions, but may have a more limited attention to macro disturbances. The author pointed out that there is indeed a formal similarity between the reduced-form equations he obtained and those associated with other behavioral frictions, including sparsity in the case of Gabaix (“A Behavioral New Keynesian Model” [Working Paper, Harvard University, 2018]). He emphasized that his model differs from other contributions, not only in terms of the foundations but also in terms of predictions at the aggregate level. An important difference, he argued, is that his model resolves the issue of multiplicity of equilibria. Another difference he mentioned is that his model allows for learning dynamics. The learning component has crucial implications for long-lasting policy experiments, such as a permanent interest rate peg. On this point, the author clarified that adaptive learning of the value functions is the very mechanism that allows one to obtain Fisher neutrality in the long run,","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"75 - 79"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700910","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42859853","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 authors started by thanking both discussants. They agreed with Robert Hall’s assessment that the paper contains two distinct parts but slightly disagreed on their characterization. They viewed the first part as proposing a mechanism for the propagation of a financial crisis and its effect on interest rates. The second part proposes a mechanism for the endogenous persistence of financial crises. The authors clarified that their paper focuses on persistence, whereas both discussants mostly focused on propagation. The authors argued that they opted for a simple yet quantitatively realistic propagation mechanism based on liquidity constraints. Their emphasis is on a novel persistence mechanism and its ability to explain a decrease in riskless interest rates over an extended period of time. Their persistence mechanism relies solely on agents not knowing the true distribution of shocks and estimating it over time. GregoryMankiw spoke next and asked the authors why they focused specifically on the recent financial crisis instead of taking amore general approach. He suggested that they could study other related episodes, including the Great Depression and the Great Moderation. Several participants proposed alternative approaches to validate the authors’mechanism.GitaGopinath suggested lookingatdisasters in emergingmarkets. Valerie Ramey recommended investigating the response of land prices to earthquakes. Emmanuel Farhi proposed studying a broader class of assets and analyzing whether their behavior is consistent with the prediction of the authors’ theory. He suggested looking into the cross-section of stocks and exchange rates during and following the Great Recession. The authors were sympathetic to these suggestions. They explained that they could not extend their analysis to the Great Depression due to data limitations. Mankiw pointed out that real rates have decreased over time since the Great Depression, whereas the authors’ persistence mechanism would
{"title":"Discussion","authors":"","doi":"10.1086/700913","DOIUrl":"https://doi.org/10.1086/700913","url":null,"abstract":"The authors started by thanking both discussants. They agreed with Robert Hall’s assessment that the paper contains two distinct parts but slightly disagreed on their characterization. They viewed the first part as proposing a mechanism for the propagation of a financial crisis and its effect on interest rates. The second part proposes a mechanism for the endogenous persistence of financial crises. The authors clarified that their paper focuses on persistence, whereas both discussants mostly focused on propagation. The authors argued that they opted for a simple yet quantitatively realistic propagation mechanism based on liquidity constraints. Their emphasis is on a novel persistence mechanism and its ability to explain a decrease in riskless interest rates over an extended period of time. Their persistence mechanism relies solely on agents not knowing the true distribution of shocks and estimating it over time. GregoryMankiw spoke next and asked the authors why they focused specifically on the recent financial crisis instead of taking amore general approach. He suggested that they could study other related episodes, including the Great Depression and the Great Moderation. Several participants proposed alternative approaches to validate the authors’mechanism.GitaGopinath suggested lookingatdisasters in emergingmarkets. Valerie Ramey recommended investigating the response of land prices to earthquakes. Emmanuel Farhi proposed studying a broader class of assets and analyzing whether their behavior is consistent with the prediction of the authors’ theory. He suggested looking into the cross-section of stocks and exchange rates during and following the Great Recession. The authors were sympathetic to these suggestions. They explained that they could not extend their analysis to the Great Depression due to data limitations. Mankiw pointed out that real rates have decreased over time since the Great Depression, whereas the authors’ persistence mechanism would","PeriodicalId":51680,"journal":{"name":"Nber Macroeconomics Annual","volume":"33 1","pages":"303 - 305"},"PeriodicalIF":7.7,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1086/700913","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43385203","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}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：