On June 30, the Department of Commerce released new data on research and development. By treating R&D as an investment, rather than an intermediate expenditure by businesses, it would add significantly to the measure of GDP. The Commerce data estimate that the level of real GDP would have been 2.7 percent higher between 1998 and 2007 had R&D been treated as an investment.
In a June 26 post, University of California, San Diego, economist James Hamilton reported cutting edge business cycle research. Somewhat surprisingly, the most up-to-date methods for dating business cycles don’t change the traditional dates for peaks and troughs very much.
In a June 24 post Stanford economist John Taylor looked at why Poland, alone among all EU countries, did not have negative growth in 2009. He gives major credit to the fact that Poland did not “overreact” to the financial crisis. Says Taylor, “By not overacting it prevented the kind of panic seen in other countries.”
Also on June 24, University of Chicago economist Chad Syverson posted a commentary on the state of our knowledge and lack thereof concerning productivity growth. He urges the collection of more and better data on the subject.
Additionally on June 24, economist James Morley of Macroeconomic Advisers published a study examining the failure of economic forecasting models to predict the recent economic crisis or offer useful policy prescriptions. The failure, he says, is in the current nature of macroeconomics itself.
On June 22, the Bureau of Labor Statistics released data from its time use survey for 2009. It reports data on how many hours per day people engage in such activities as work, cooking, child care, leisure and so on.
In June, the American Economic Association announced that henceforth all articles in its Journal of Economic Perspectives would be freely available online. The JEP is the association’s most policy-oriented journal and the one that is most accessible to non-economists.
In a June paper from the Inter-American Development Bank, economists Eduardo Cavallo et al. studied the effects of catastrophic natural disasters on economic growth. Surprisingly, the authors found that they seldom affect subsequent economic growth.
In another June paper, economists Volker Grossman, Thomas Steger and Timo Trimborn examine optimum long-term growth policy. They argue that research and development is the wellspring of growth and that the social rate of return to it is far higher than the economic return to businesses. Therefore, there is a strong case for subsidizing R&D through the tax code.
Also in a June study, economists Dennis Tao Yang, Vivien Chen and Ryan Monarch examine rapidly rising wages in China and their potential impact on Chinese competitiveness. They note that average real wages more than tripled between 1997 and 2007, and that surplus rural labor supplies are quickly becoming depleted. However, wage levels are still only a fraction of those in places like Japan and Hong Kong.
Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).
June 30: Focus on International Economics
June 29: Focus on Fed and Inflation
June 28: Focus on China
June 27: Weekly Roundup