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U.S economic performance: good fortune, bubble, or new era?

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  • Lynn Elaine Browne
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    Abstract

    What accounts for the extraordinary performance of the U.S. economy in recent years? How is that we have been able to enjoy such strong economic growth and resulting low unemployment rates without an upturn in inflation? The author reviews the primary explanations offered for these unusually favorable circumstances - that the U.S. economy has been the beneficiary of temporary factors that have held down the inflation rate or that the U.S. economy has entered a new era of intensified competition and rising productivity growth in which inflation is less of a threat. She also discusses arguments that the U.S. economy may be experiencing an asset price bubble, noting that while rising stock prices cannot explain low inflation, decreases in inflation may have contributed to rising stock prices.

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    Bibliographic Info

    Article provided by Federal Reserve Bank of Boston in its journal New England Economic Review.

    Volume (Year): (1999)
    Issue (Month): May ()
    Pages: 3-20

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    Handle: RePEc:fip:fedbne:y:1999:i:may:p:3-20

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    Related research

    Keywords: Economic development ; Productivity ; Inflation (Finance) ; Unemployment ; Stock - Prices ; Japan;

    References

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    1. Martin Feldstein, 1983. "Inflation and the Stock Market," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 186-198 National Bureau of Economic Research, Inc.
    2. Robert J. Gordon, 1998. "Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying NAIRU," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 297-346.
    3. Arthur B. Kennickell & Martha Starr-McCluer & Annika E. Sunden, 1997. "Family finances in the U.S.: recent evidence from the Survey of Consumer Finances," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jan, pages 1-24.
    4. Lynn Elaine Browne & Rebecca Hellerstein & Jane Sneddon Little, 1998. "Inflation, asset markets, and economic stabilization: lessons from Asia," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-32.
    5. Geoffrey M.B. Tootell, 1994. "Restructuring, the NAIRU, and the Phillips curve," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 31-44.
    6. Marco A. Espinosa-Vega & Steven Russell, 1997. "History and theory of the NAIRU: a critical review," Economic Review, Federal Reserve Bank of Atlanta, issue Q 2, pages 4-25.
    7. Roger E. Brinner, 1999. "Is inflation dead?," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 37-49.
    8. Yosuke Shigemi, 1995. "Asset Inflation in Selected Countries," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 13(2), pages 89-130, December.
    9. Richard W. Kopcke, 1988. "Inflation, taxes, and interest rates," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 3-14.
    10. Jeffrey C. Fuhrer, 1995. "The Phillips curve is alive and well," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 41-56.
    11. Lynn Elaine Browne & Rebecca Hellerstein, 1997. "Are we investing too little?," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 29-50.
    12. Steven A. Sharpe, 1999. "Stock prices, expected returns, and inflation," Finance and Economics Discussion Series 1999-02, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:
    1. Bugamelli, M. & Pagano, P. & Paterno, F. & Pozzolo, A.F. & Rossi, S. & Schivardi, F., 2003. "Ingredients for The New Economy: How Much Does Finance Matter?," EIFC - Technology and Finance Working Papers 31, United Nations University, Institute for New Technologies.
    2. David G. McMillan, 2010. "Level-shifts and non-linearity in US financial ratios: Implications for returns predictability and the present value model," Review of Accounting and Finance, Emerald Group Publishing, vol. 9(2), pages 189-207, May.
    3. Hester,D.D., 2003. "U.S. monetary policy in the Greenspan era: 1987-2003," Working papers 23, Wisconsin Madison - Social Systems.

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