Testing for a New Economy in the 1990s
AbstractThis paper examines how much structural change there was in the U.S. economy in the last half of the 1990s. The results are consistent with the hypothesis that there was only one major structural change, namely the huge increase in stock prices relative to earnings. All other large changes can be explained by this change. There is no obvious reason for the large increase in stock prices relative to earnings. Increased productivity growth does not appear to be an answer since the data show that there was only a modest increase in long run productivity growth in the last half of the 1990s. Also, earnings growth and the share of earnings in the economy were not unusually large.
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1388.
Length: 25 pages
Date of creation: Dec 2002
Date of revision: Mar 2003
Publication status: Published in Business Economics (January 2004), 39(1): 43-53
Note: CFP 1194.
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Other versions of this item:
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
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- William D. Nordhaus, 2001.
"Productivity Growth and the New Economy,"
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8096, National Bureau of Economic Research, Inc.
- Donald W.K. Andrews, 2002.
"End-of-Sample Instability Tests,"
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1369, Cowles Foundation for Research in Economics, Yale University.
- Andrews, Donald W K & Fair, Ray C, 1988. "Inference in Nonlinear Econometric Models with Structural Change," Review of Economic Studies, Wiley Blackwell, vol. 55(4), pages 615-39, October.
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