The Sources of Labor Productivity Variation in U.S. Manufacturing, 1947-80
This paper examines the relationship between inflation, exchange rates, and the pattern of international trade and payments in a small economy with utility-maximizing agents and a transactions demand for money. Fully anticipated inflation has real effects in the model through its role as a tax on money and thereby on monetary transactions. An increase in the rate of monetary expansion generally reduces the value of domestic output and alters the composition of domestic production. The result is a change in the pattern of international comparative advantage and trade flows. The initial depreciation of the exchange rate following an increase in the rate of monetary expansion is accompanied by a trade surplus and capital outflow, while the subsequent depreciation is accompanied by a trade deficit.
|Date of creation:||Jul 1981|
|Date of revision:|
|Publication status:||published as Bernanke, Ben. "On the Sources of Labor Productivity Variation in U.S. Manufacturing, 1947-1980." Review of Economics and Statistics, Vol. 65, No. 2,(May 1983), pp. 214-224.|
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- Chamberlain, Gary & Griliches, Zvi, 1975. "Unobservables with a Variance-Components Structure: Ability, Schooling, and the Economic Success of Brothers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 422-49, June.
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