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One of the notable macroeconomic developments of the last two decades has been the apparent decline in the so-called neutral real rate of interest (or r-star). The declining level of r-star has significantly reduced forecasts of the steady-state federal funds rate associated with “normalized” monetary policy. Because a lower steady-state policy rate implies a heightened probability of reaching the effective lower bound on the federal funds rate in the event of an economic downturn, a debate has opened among academics and policymakers about potential changes in Fed’s monetary policy framework that might ameliorate the lower bound problem. This paper introduces a variation of price-level targeting that satisfies a definition of price stability that requires the central bank to keep the price level within a pre-specified percentage of a pre-specified target path for all time horizons into the future. The framework, referred to as bounded price-level targeting, is compared to other proposed frameworks. The paper discusses the conditions under which bounded price-level targeting is consistent with other proposals. [ABSTRACT FROM AUTHOR]

Immigration policy is one of the most hotly contested political issues in the United States. In this paper, we evaluate the role of immigration in the U.S. economy. We pose the counterfactual question, “what would happen if net migration to the U.S. were to cease?” Using the REMI PI+ macroeconomic policy analysis model, we set to zero international immigration from 2018 to 2060, and estimate the national- and state-level economic and demographic implications of this change. Our estimates show that, in the absence of immigration, total U.S. employment would peak in 2019, and the U.S. GDP and labor force would decline by 20% through 2060. Per capita income and GDP effects, however, are relatively minor and sensitive to assumptions in labor and capital markets. [ABSTRACT FROM AUTHOR]

This paper examines the influence of selected indicators of the banking sector (M3 monetary aggregates and bank loans provided to the non-financial private sector) on economic growth (GDP) in the Eurozone, the USA and Japan. Cointegration of these selected indicators of the banking sector has been demonstrated in relation to the development of GDP using the Engle - Granger cointegration test. These tests were applied to selected statistical data from the years 2000 to 2015. The first was to determine the optimum delay using Akaike criteria for all-time series analysed. Then the presence of a unit root was analysed using the Dickey - Fuller test. Based on the test results, time series were excluded which appear to be stationary. If the conditions were met, testing then continued with the Engle - Granger test to detect cointegration relations, which would determine a relationship between selected variables. Based on these tests, it was found that at a significance level of 0.05, no cointegration relationship exists between any of the time series in the countries surveyed. [ABSTRACT FROM AUTHOR]

The composition of economic growth can be analyzed in two different ways. In the ‘traditional method’ for the decomposition of GDP growth, total imports are deducted from exports. This approach underestimates the importance of exports for the growth in GDP, and overestimates the importance of domestic expenditure categories. In the alternative methodology proposed in this paper, imports are allocated to all expenditure categories. Although this ‘import-adjusted method’ is more complex than the ‘traditional method’, it has the considerable advantage that the contributions of the expenditure categories to GDP growth provide a better understanding of why GDP growth decelerates or accelerates. The methodology and data requirements for calculating the import content of final demand, and the implications for the decomposition of real GDP growth, are discussed. For six European countries and the United States, the paper shows that applying the alternative methodology provides rather a different economic story. [ABSTRACT FROM AUTHOR]

In the XIXth century, the British Empire dominated the world economy. In the last century, the United States of America (USA) became the economic superpower of the world. The US-led post-war world economic order had the following two strong pillars: the principle of fixed parities and US dollar standard and the principle of nondiscrimination and free trade. Also, the Bretton Woods institutions clearly expressed the US post-war dominance of the world economic order. A new economic order is going to be set up in the world, dominated by Asia. The paper aims at presenting an analysis of the old world economic order and the birth of a new order. Our methodological approach is based on a literature review. [ABSTRACT FROM AUTHOR]

The article presents a reprint of the article "Debt Is a Misstone" by Michael J. Boskin, which appeared in the "Project Syndicate." The author discusses the controversy of the errors on the research of economist Carmen Reinhart and Kenneth Rogoff that focused on the large decline in economic growth associated with the public debt or gross domestic product (GDP). He also mentions the different methods used by economists to analyze the economic condition and fiscal issues in the country.

We examine the relationship between offshoring and the labor market in an occupational choice model of trade and endogenous growth where workers are employed on the basis of their individual skill levels. Trade liberalization leads to offshoring and reduces employment in the manufacturing sector. Displaced workers move into traditional and innovation sectors according to their skill levels, shaping real wages and aggregate productivity in the manufacturing sector. The paper aims to show how inter-sectoral labor market adjustments, highlighted by skill heterogeneity, could be a possible explanation for the simultaneous rise in productivity and reduction in real wages that have coincided with the sharp escalation of offshoring activities in the U.S. manufacturing sector since 2004. ( JEL F16, F23, J24) [ABSTRACT FROM AUTHOR]

This paper studies contribution of capital deepening, technological progress and efficiency improvement to economic growth while focusing on cross-country data, and thus finds itself at the crossroads of growth and development accounting. We take a production frontier approach to growth accounting and choose DEA as the frontier estimation method. To explore the effects that windfall gains from natural resource use have on growth, output data are corrected for pure natural resource rents—part of GDP figures not earned by either labor or capital. Taking into account countries’ natural resources, we find that in the two decades from 1970 to 1990 the average contribution of technological catch-up to per worker output growth was, if anything, negative on the worldwide scale and this trend continued till the mid 1990ies. Analysis of efficiency estimates also shows a possible change over the period of 1970–1990 in the effect of natural resources on country’s performance [ABSTRACT FROM AUTHOR]

This paper presents evidence of a non-linear relationship between real GDP growth and oil price changes for the US economy. We also argue that this non-linearity is not merely due to the use of data from the mid-1980s onwards, as most authors, so far, seem to believe. In fact, we find the existence of non-linearity with the use of data earlier than 1984, and even before 1977. Furthermore, we question that the non-linear transformations of oil prices proposed in the literature are the most appropriate ones for reflecting such non-linearity. [ABSTRACT FROM AUTHOR]

In this paper we present an overview of GDP and productivity growth patterns in OECD countries over the past decade, on the basis of harmonized data. Our evidence suggests that fast‐growing countries generally shared three characteristics: improvements in labour utilization; a generalized enhancement in human capital; and rapid shifts in the composition of physical capital towards information and communication technology (ICT) equipment. Particularly, we show that technological change embodied in new ICT capital goods has been a primary source of output and productivity growth in ICT‐using sectors. The international comparison allows relating growth patterns to institutional and policy indicators, thereby offering some preliminary insights into the potential sources of growth disparities. Cross‐country evidence yields some tentative support to the idea that institutional factors affecting competition in the product market are likely to affect productivity patterns, especially in a period of rapid diffusion of a general‐purpose technology (such as ICT). [ABSTRACT FROM PUBLISHER]

Four years after the French Revolution, in 1793 a series of wars among France and other major powers of Europe began and they lasted until 1815. There is disagreement among economic historians about the effects of these wars on the trend of US economic growth. This paper aims to answer the following question. Did America as a neutral nation take advantage of economic possibilities caused by Europe at war through trade? To put it differently, this paper questions whether there was an export-led growth due to the war. To answer this question, we re-examined the export-led growth hypothesis for the period 1790-1860 using the ARDL methodology. Based on this methodology, a co integrated relationship is found among the variables of real GDP, labor, exports and exchange rates. The results suggest that the economic growth of the US was not export-driven. In addition, parallel to the results of unit root tests with structural breaks, the coefficient of the dummy variable was statistically significant in the long run, implying that the war did have a significant effect on the economic growth trend of the US. [ABSTRACT FROM AUTHOR]

The key feature of endogenous growth models is that they imply that permanent changes in government policy can have permanent effects on growth rates. In this paper we develop and implement an empirical framework to test this implication. In a regression of growth rates on current and lagged policy variables the sum of the slope coefficients for each policy variable should be nonzero (zero) for endogenous (exogenous) growth models. In our estimation we use time series data spanning up to 100 years for the United States and 160 years for the United Kingdom. We find that the implication for exogenous growth is usually rejected when both a tax variable and a public capital variable are included in the regression; failing to include both variables biases the results in favor of exogenous growth models. Our findings show that it is possible to have endogenous growth even when U.S. and U.K. GDP growth rates appear to be stable over time. We conclude that at the aggregate level, the production function appears to exhibit constant returns to scale in reproducible inputs. [ABSTRACT FROM AUTHOR]

Discussions of impending capital shortage have begun to fall into something of a pattern. Typically, the author begins by examining the share of GNP that needs to be invested in order to meet the requirements of economic growth at more or less our historical rate. He modifies the recent historical GNP ratio of 15 percent for total private investment or of 10.5 percent for business fixed-investment in accordance with a number of fairly obvious new elements—more environmental and health and safety investment, probably less housing investment, perhaps a little less for schools and hospitals. Typically, he finds a modest increase in investment requirements over past investment rates amounting to one-half to one percent of GNP. The author then turns to the supply of savings from households and firms, and notes as a favorable factor that the personal savings ratio of late has risen substantially, or perhaps as an unfavorable one that the personal savings ratio is apt to decline hereafter from present high levels. He further notes that corporate profits have risen substantially over the last year or perhaps that their recent high level involves a significant overstatement owing to inventory profits and underdepreciation. He is apt to end up with a question mark concerning the future net borrowing or lending position of the public sector. My own conclusion from repeated performance of this exercise has been that the Federal budget deficit or surplus is the crucial factor. Anyone who relies on a future Federal surplus as the means of forestalling a capital shortage at full employment has the burden of proof upon himself. Insofar as I have had to modify my views over the last year, it has been to the effect that household and corporate savings look a little more promising than they did earlier, while the outlook for a significant full employment surplus looks a little more dubious. [ABSTRACT FROM AUTHOR]

The Genuine Progress Indicator (GPI) was designed to reveal the economic, social, and environmental trade-offs associated with conventional economic growth as traditionally measured by Gross Domestic Product (GDP). Although originally designed for use at the national scale, an interest has developed in the United States in a state-level uptake of the GPI to inform and guide policy. This study presents the first fifty-state estimate for U.S. GPI in order to address questions over its design, implementation, and ultimate potential as a tool to guide state-level economic policy. Following a review of the current state of analysis and critique of GPI, we provide an overview of methodology and database development. Results are then presented, including discussion of lessons learned through a fifty-state application. The paper concludes with suggestions for further research and next steps to consolidating a consistent methodology. [ABSTRACT FROM AUTHOR]

The article reports on the economic development problem in Latin America in relation to that of the U.S. It provides an assessment and interpretation of the poor economic performance in Latin America by focusing on trended data on gross domestic product (GDP) per capita between 1960 and 2009. It documents the basic facts about the development problem in Latin and decomposes GDP per capita to show that low total factor productivity (TFP) is at the core of the problem.

Abstract: This paper hypothesized that democratic nations, as characterized by Polity IV Project regime scores, spend more on health care than autocratic nations and that the association reported here is independent of other demographic, health system or economic characteristics of nations. WHO Global Observatory data on 159 nations with roughly 98% of the world’s population were examined. Regime scores had significant, direct and independent associations with each of four measures of health care expenditure. For every unit increment in a nation’s regime score toward a more democratic authority structure of governance, we estimated significant (p <0.05) increments in the percent of GDP expended on health care (+0.14%), percent of general government expenditures targeted to health care (+0.25%), total per capita expenditures on health (+34.4Int$) and per capita general government expenditures (+22.4Int$), while controlling for a population’s age distribution, life expectancy, health care workforce and system effectiveness and gross national income. Moreover, these relationships were found to persist across socio-economic development levels. The finding that practices of health care expenditure and authority structures of government co-vary is instructive about the politics of health and the challenges of advancing global health objectives. [Copyright &y& Elsevier]

Abstract: We are living in a global service economy in which services now make up more than 78% of the US Gross Domestic Product (GDP). This growth in Service has also become a global phenomenon and this has brought much needed attention to Service Science and Service Systems Engineering (SSE). As part of these efforts, this paper proposes the enhancement of existing architectural frameworks for Service Systems. We readily concede that IT is at the heart of Service Systems but we argue existing frameworks need to be expanded to address service systems governance and insertion of technology breakthroughs. A modified NIST framework is illustrated, that includes an Enterprise/Service Management plane to analyze energy Smart Grids as an end-to-end service provider. We also realized the need for integration of tools for the real-time dynamic analysis of ever-changing requirements within a Service System. This concept is illustrated in the form of an internet manufacturing laboratory where design, fabrication, IT, and other supporting tools are integrated to rapidly fabricate complex 3D prototype models. Finally, we discuss issues which need to be addressed for the creation of curricula and professional degree programs in Service Systems Engineering at the graduate level. As a result, we propose a plan for including a Service Systems Engineering specialization track within traditional Systems Engineering programs. [Copyright &y& Elsevier]

This article provides a broad overview of the measurement techniques used in estimating GDP and the national accounts in the United States. In the United States, the GDP and the national accounts estimates are fundamentally based on detailed economic census data and other information that is available only once every five years. The challenge lies in developing a framework and methods that take these economic census data and combine them using a mosaic of monthly, quarterly, and annual economic indicators to produce quarterly and annual GDP estimates. One problem is that the other economic indicators that are used to extrapolate GDP in between the five-year economic census data—such as retail sales, housing starts, and manufacturers shipments of capital goods— are often collected for purposes other than estimating GDP and may embody definitions that differ from those used in the national accounts. Another problem is some data are simply not available for the earlier estimates in the reporting process. For the initial monthly estimates of GDP, data on about 25 percent of GDP—especially in the service sector—are not available, and so these sectors of the economy are estimated based on past trends and whatever related data are available. The initial monthly GDP estimates based on these extrapolations are revised as more complete data become available In producing the national accounts estimates, the Bureau of Economic Analysis attempts to strike a balance between accuracy and timeliness so that the estimates can be used to monitor real overall economic growth and inflation, as well as major sectors of interest. [ABSTRACT FROM AUTHOR]

We study the conditional distribution of GDP growth as a function of economic and financial conditions. Deteriorating financial conditions are associated with an increase in the conditional volatility and a decline in the conditional mean of GDP growth, leading the lower quantiles of GDP growth to vary with financial conditions and the upper quantiles to be stable over time. Upside risks to GDP growth are low in most periods while downside risks increase as financial conditions become tighter. We argue that amplification mechanisms in the financial sector generate the observed growth vulnerability dynamics. (JEL C53, E23, E27, E32, E44) [ABSTRACT FROM AUTHOR]

Under current policies the deficit may get to 7% of GDP in 10 years. Our political process is not coming to grips with responsible fiscal policy. We have both parties agreeing a deficit is a great way of attracting votes. Future increases in spending are coming from entitlements. We need incentives in health care to do things more efficiently and encourage competition. The biggest risk for the U.S. economy is the global bond market. We need to get moving. If not, eventually inflation, or a crisis of confidence, will be the wake-up call on the growth of U.S. debt. [ABSTRACT FROM AUTHOR]

The U.S. economy faces sizeable headwinds to keeping GDP growth even at 2% over the next decade. Demographics imply that labor force growth will be much slower than historical norms. The enormous twentieth century increase in average educational attainment is unlikely to be repeated. And the best guess for productivity growth is that it will continue to be modest-perhaps along the lines seen in the 1970s to early 1990s, or since 2004. There are no easy cures for low growth. We can hope for another wave of broadbased IT-linked innovation. But while there is enormous uncertainty, even worthwhile policy steps are unlikely to move the dial very much on their own. [ABSTRACT FROM AUTHOR]

Analyzing the performance of the economy in real time is a challenge for those who must forecast macroeconomic variables such as inflation or employment. A key aspect of this challenge is evaluating the incoming flow of information contained in economic announcements. In this article, the authors develop a simple-to-read index of these announcements that they then use to construct nowcasts. The index tracks whether key economic data have come in stronger, weaker, or as expected during the current quarter relative to a baseline consensus forecast. Specifically, the data releases are weighted relative to their importance in updating forecasts of real gross domestic product growth during the current quarter. [ABSTRACT FROM AUTHOR]

Nonfarm employment continued to expand in 2015. Private service-providing industries accounted for the vast majority of job gains. Despite a slowdown in the overall rate of job growth in 2015, the gains were a continuation of an expansion that started in May 2014, when employment recovered to its previous peak level of January 2008. [ABSTRACT FROM AUTHOR]

Research and development (R&D) has a large effect on both state output and total factor productivity in the long run. Our estimates for the private sector of the U.S. states from 1963 to 2007 show that the R&D elasticity averages 0.056-0.143. The implied returns to state Gross Domestic Product (GDP) from R&D spending are 82-211%. There are also positive R&D spillovers, with 70-80% of the total returns accruing to other states. We also find that states with more human capital have higher own- and other-R&D elasticities, and those in lowest tier of economic development have the least own-state R&D elasticity but the highest other-R&D elasticity. In addition, we find that the positive effect of R&D spillovers across states is larger when we consider R&D spillovers across states based on economic similarity of R&D across sectors. [ABSTRACT FROM AUTHOR]

Overview: Dollar surge brings mixed consequences The strengthening dollar is now becoming a significant factor for global growth and our forecasts. The tradeweighted dollar is up 2.5% over the last month and over 12% on a year ago., Driving the latest rise are growing expectations of US rate hikes while monetary policy in many other major economies is headed in the opposite direction., The beginning of ECB QE has prompted a further slide in bond yields and the euro - which at 1.06/US$ is on course to fulfill our forecast of near-parity by year-end. Weak data in Japan also raises the chance of a further expansion of QE there later this year., We remain relatively positive about the advanced economies: we forecast G7 GDP growth at 2.2% for 2015 and 2.3% next. This month we have revised up German growth for 2015 to 2.4% - a four-year high., Robust US growth and a strong dollar are good news for the advanced economies. US import volume growth firmed to over 5% on the year in January, while the dollar surge potentially boosts the share of other advanced countries in this growing market., But for the emerging economies the picture is mixed. A stronger US may boost exports, but rising US rates are pulling capital away: there has been a slump in portfolio inflows into emergers in recent months. Emerging growth may also suffer from higher costs of dollar funding and a rising burden of dollar debt as currencies soften - the more so if US rates rise faster than markets expect., Moreover, emergers are also under pressure from a slowing China. Chinese import growth has been weak of late and commodity prices remain under downward pressure. A notable casualty has been Brazil, which we have downgraded again this month - GDP is expected to slump 1.1% this year., Emerging GDP growth overall is expected to slip to 3.7% this year, the lowest since 2009. And excluding China, emerging growth will be only 2.2% - the same as the G7 and the worst performance relative to the advanced economies since 1999. [ABSTRACT FROM AUTHOR]

We argue that financial market development contributed to the rise in the skill premium and residual wage inequality in the United States since the 1980s. We present an endogenous growth model with imperfect credit markets and establish how improving the efficiency of these markets affects modes of production, innovation, and wage dispersion between skilled and unskilled workers. The experience of U.S. states following banking deregulation provides empirical support for our hypothesis. We find that wages of skilled workers increased by between 0.5% and 6.3% following deregulation while those of unskilled workers fell by between 3.5% and 8.7%. Similarly, residual (or within-group) inequality increased; the 90-50 percentile ratio of residuals from a Mincerian wage regression and their standard deviation increased by 4.2% and 1.7%, respectively. [ABSTRACT FROM AUTHOR]

The GDP concept has historically been used to measure human wellbeing and progress. This analytical purview is now coming into question. The GDP concept limits analysis to the economic factor and ignores the social and cultural. Analysis should focus on how well the people are doing. An avalanche of studies is now being directed toward dethroning the GDP as the sole indicator of human well-being and progress. This has been manifest in the derivation of many social indexes which indicate that while the global economy as well as the American economy are experiencing GDP growth, basic needs are not being fulfilled. [ABSTRACT FROM AUTHOR]

We provide new evidence on patterns of structural change in advanced economies, reconsidering the stylised facts put forward by , , and . Since 1980, the services sector has overwhelmingly predominated in the economic activity of the European Union, Japan, and the US, but there is substantial heterogeneity among services. Personal, finance, and business services have low productivity growth and increasing shares in employment and GDP. By contrast, shares of distribution services are constant, and productivity growth is rapid. We find that the labour share in value-added is declining, while the use of ICT capital and skilled labour is increasing in all sectors and regions. [ABSTRACT FROM AUTHOR]

Using data from U.S. states, we find a positive relationship between trust and growth. According to our results, a 10 percentage point increase in trust increases the growth rate of GDP by 0.5 percentage points and the growth rate of manufacturing employment by 1.3 percentage points over a five-year period. Our results are robust to the endogeneity between trust and growth. [ABSTRACT FROM AUTHOR]

Given the attention currently focused on the Arab world in part as a result of adjustments in U.S. foreign policy, a fresh look at Arab socioeconomic performance is in order. The Arab world is defined by language rather than ethnicity. The League of Arab States, formed in 1945, consists of all countries in which (a dialect of) Arabic is the spoken language of the majority. It is useful to compare the human development diversity of the Arab world to that of Latin America, another vast geographic area defined by language and culture. Our strategy in this article is therefore to disaggregate the Arab world into Arab sub-Saharan Africa, Arab fuel-endowed economies, and a remainder we call the Arab Mediterranean, and to compare these three Arab worlds to non-Arab sub-Saharan Africa, non-Arab fuel endowed economies, and the rest of the non-Arab world. We will evaluate Arab socioeconomic progress from 1970 to as close to the present as the data allow. [ABSTRACT FROM AUTHOR]

This study uses a state-space model to estimate the "true" unobserved measure of total output in the U.S. economy. The analysis uses the entire history (i.e., all vintages) of selected real-time data series to compute revisions and corresponding statistics for those series. The revision statistics, along with the most recent data vintage, are used in a state-space model to extract filtered estimates of the "true" series. Under certain assumptions, Monte Carlo simulations suggest this framework can improve published estimates by as much as 30 percent, lasting an average of 11 periods. Realtime experiments using a measure of real gross domestic product show improvement closer to 10 percent, lasting for 1 to 2 quarters. [ABSTRACT FROM AUTHOR]

The authors use a growth accounting framework to examine growth of the rapidly developing Chinese economy. Their findings support the view that, although feasible in the intermediate term, China's recent pattern of extensive growth is not sustainable in the long run. The authors believe that China will be able to sustain a growth rate of 8 to 9 percent for an extended period if it moves from extensive to intensive growth. They next compare potential growth in China with historical developments in the United States and the European Union. They discuss the differences in production structure and level of development across the three economies that may explain the countries' varied intermediate-term growth prospects. Finally, the authors provide an analysis of "green" gross domestic product and the role of natural resources in China's growth. [ABSTRACT FROM AUTHOR]

This article discusses arguments on the role of increased oil prices in recessions, period of excessive inflation, reduced productivity and lower economic growth. There is a widespread belief that exogenous political events in the Middle East cause recessions in industrialized countries through their effect on the price of oil. This belief is fueled by the close statistical relationship between political events in the Middle East and recessions in the U.S. Even if we do not necessarily accept the view that exogenous political events in the Middle East cause recessions in the United States, it is undoubtedly true that many recessions since 1972 have been associated with major oil price increases, although again the association is less than perfect. Another way of undermining the benchmark result is to allow for capital-energy complementarities in production. In the presence of capital-energy complementarities, one would expect an oil price increase to lower real GDP by lowering the demand for capital services. Another potential channel of transmission is the transfer of wealth involved in paying higher oil import bills. The total wealth transfer from the industrialized countries to the oil-producing countries, however, will tend to be small, given the small expenditure on foreign oil relative to GDP.

We reconsider the out-of-sample forecasting ability of a large number of financial variables with respect to real output growth over the 1985:1-1999:4 period We show that models including financial variables display almost no forecasting ability relative to an autoregressive benchmark model over this period according to a mean squared forecast error metric. However, tests based on forecast encompassing indicate that many financial variables do, in fact, contain information that is useful for forecasting real output growth over the 1985:1-1999:4 out-of-sample period. Our results suggest that the extant literature exaggerates the demise of the forecasting power of financial variables with respect to real activity since the mid-1980s. [ABSTRACT FROM AUTHOR]

The volatility of U. S. real GDP growth since 1984 has been markedly lower than over the previous quarter century. We utilize frequency-domain and VAR methods to distinguish among competing explanations for this reduction: improvements in monetary policy, better business practices, and a fortuitous reduction in exogenous disturbances. We find that reduced innovation variances account for much of the decline in aggregate output volatility, suggesting that good luck is the most likely explanation. Good practices and good policy appear to have played a more important role in explaining the post-1984 decline in the volatility of consumer price inflation. [ABSTRACT FROM AUTHOR]

Evaluates the contribution of high-technology investment spending to trends in investment and overall economic growth in the U.S. in the 1990s. Output and investment growth rates and contributions of investment to gross domestic product (GDP) growth for national income and product accounts data; Contributions of growth of GDP; Growth rates of major components of equipment and software investment. INSET: MEASURING QUALITY IMPROVEMENT WITH HEDONICS.

Examines the growth of United States' gross domestic product (GDP) from the period of 1984-1998 in relation with the state of its economic development. Types of changes in the economic environment; Decline in the volatility of GDP growth; Conclusions.

Abstract--We hope to answer three questions: Has there been a structural break in postwar U.S. real GDP growth towards stabilization? If so, when? What is the nature of this structural break? We employ a Bayesian approach to identify a structural break at an unknown changepoint in a Markov-switching model of the business cycle. Empirical results suggest a break in GDP growth toward stabilization, with the posterior mode of the break date at 1984:1. Furthermore, we find a narrowing gap between growth rates during recessions and booms that is at least as important as any decline in the volatility of shocks. [ABSTRACT FROM AUTHOR]