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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.

This paper investigates the accuracy and heterogeneity of output growth and inflation forecasts during the current and the four preceding NBER-dated US recessions. We generate forecasts from six different models of the US economy and compare them to professional forecasts from the Federal Reserve's Greenbook and the Survey of Professional Forecasters (SPF). The model parameters and model forecasts are derived from historical data vintages so as to ensure comparability to historical forecasts by professionals. The mean model forecast comes surprisingly close to the mean SPF and Greenbook forecasts in terms of accuracy even though the models only make use of a small number of data series. Model forecasts compare particularly well to professional forecasts at a horizon of three to four quarters and during recoveries. The extent of forecast heterogeneity is similar for model and professional forecasts but varies substantially over time. Thus, forecast heterogeneity constitutes a potentially important source of economic fluctuations. While the particular reasons for diversity in professional forecasts are not observable, the diversity in model forecasts can be traced to different modeling assumptions, information sets and parameter estimates. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to shed light on the controversial issue of regional development incentives. Although extensive research has been conducted, a review of the literature gives an inconclusive answer to whether economic incentives are effective. Why do researchers arrive at different conclusions, even after analysing the same programmes? Among the problems that we find, for example, is the fact that for some researchers ‘effective’ means the significant location of new firms in targeted areas, while for others the creation of jobs regardless of whether new firms are arriving in a significant fashion. Furthermore, as we elaborate, the selection of an econometric model will have a significant impact on expected results. Different models, with different limitations, will lead researchers to evaluate the same incentive programme but arrive at different conclusions regarding its effectiveness. The contribution of the paper is to inform policymakers about the potential opportunities and pitfalls when designing incentive strategies. This is particularly relevant, given that both the US and Europe have been promoting incentives as a tool for regional economic development. [ABSTRACT FROM AUTHOR]

The article focuses on economic growth in the U.S. The vitality of the U.S. economy continue to astonish economic forecasters. A consensus is now emerging that something fundamental has changed, with new economy proponents pointing to information technology as the causal factor behind the strong performance. In this view, technology is profoundly altering the nature of business, leading to permanently higher productivity growth throughout the economy. Skeptics remain, however, arguing that the recent success reflects a series of favorable, but temporary, shocks. Productivity growth, capital accumulation, and the impact of technology were topics once reserved for academic debates, but the recent success of the U.S. economy has moved them into popular discussion. This paper employs well-tested and familiar methods to analyze important new information made available by the recent benchmark revision of the U.S. national income and product accounts. The late 1990s were exceptional in comparison with the growth experience of the U.S. economy over the past quarter century as a whole. Although growth rates have not yet returned to those of the golden age of the U.S. economy in the 1960s, the data nonetheless clearly reveal a remarkable transformation.

The paper analyzes the current state of the world economy and offers a short-term forecast of its development. Our analysis of log-periodic oscillations in the DJIA dynamics suggests that in the second half of 2017 the United States and other more developed countries could experience a new recession, due to the third phase of the global financial crisis. The economies of developing countries will continue their slowdown due to lower prices of raw commodities and the increased pressure of dollar debt load. The bottom of the slowdown in global economic growth is likely to be achieved in 2017-2018. Then we expect the start of a new acceleration of global economic growth at the upswing phase of the 6th Kondratieff cycle (2018-2050). A speedy and steady withdrawal from the third phase of the global financial crisis requires cooperative action between developed and developing countries within G20 to stimulate global demand, world trade and a fair solution of the debt problem of developing countries. [ABSTRACT FROM AUTHOR]

A random walk with drift is a good univariate representation of US GDP. This paper shows, however, that US economic downturns have been associated with predictable short-term recoveries and with changes in long-term GDP forecasts that are substantially smaller than the initial drop. To detect these predictable changes, it is important to use a multivariate time series model. We discuss reasons why univariate representations can miss key characteristics of the underlying variable such as predictability, especially during recessions. [ABSTRACT FROM AUTHOR]

This paper provides a survey of business cycle facts, updated to take account of recent data. Emphasis is given to the Great Recession, which was unlike most other postwar recessions in the United States in being driven by deleveraging and financial market factors. We document how recessions with financial market origins are different from those driven by supply or monetary policy shocks. This helps explain why economic models and predictors that work well at some times do poorly at other times. We discuss challenges for forecasters and empirical researchers in light of the updated business cycle facts. [ABSTRACT FROM AUTHOR]

The article discusses a financial framework for economic growth in the United States. The article presents a unified financial counterpart to a long-term economic projection. Based on assumptions of varying rates of growth, a set of projections of economic activity in 1970 is presented. A "judgment" model will be selected based on the results of the projections. The article then introduces a theoretical framework that links levels of economic and financial activity. By using the "judgment" model as a reference, the pattern of relationships will be applied to a projection of assets and liabilities for the individual components of the financial network.

This paper considers the allocation of national technological resources to different sectors of the economy. The impact of economic investments in technology is related to national, industry, and company growth. In some sectors of the economy investments in research and development (R and D) are well below the saturation level, where increasing the investment level and fraction of scientific and engineering manpower devoted to R and D may be expected to yield increased economic growth. A comparison is made of the sources and consumers of R and D funds in the U. S. and Israel, particularly as related to size of firms. Conclusions are obtained in the form of magnitude and allocation of R and D investments and utilization of scientific and engineering manpower for industrial R and D in Israel. [ABSTRACT FROM AUTHOR]

When the 10 percent income tax surcharge was enacted in the summer of 1968, there were many forecasts that this tax increase would significantly dampen economic growth and reduce the rate of increase of prices. There was even some fear that the tax increase coupled with the expenditure ceiling that the U.S. Congress imposed would overkill the inflation and produce a recession. Economic events did not match these predictions. This paper will attempt to identify the reasons why the forecasts for 1968-69 were in error. Conditional forecasts will be derived from simulations obtained from the FRB-MIT econometric model using a variety of assumptions about alternative public policies. The analysis permits to determine whether the forecast errors might have been attributable to inaccurate predictions of public policy. According to authors, the ex ante forecasts of GNP were affected by (1) the failure to predict the mid-1968 easing of monetary policy and (2) the misestimates of federal spending which exceeded the ceiling.

This paper estimates dynamic effects of public capital on output per capita. Based on an open economy growth model, I derive a version of the income convergence equation augmented with public capital. This equation is estimated using panel data of United States and Japanese regions. Sensible results are obtained when public capital is disaggregated into components. In both countries, the infrastructure component of public capital turns out to have significantly positive effects. The implied elasticity of output with respect to infrastructure is somewhere around 0.1 to 0.15. This suggests a modest contribution of infrastructure to postwar growth of the two countries. [ABSTRACT FROM AUTHOR]

To explain past and predict future, regional economic performance in the U.S. over the 1967-95 period, this paper constructed an eight-region model with 53 sectors per region. Output in each of 49 private nonfarm industries is divided into goods and services for intermediate use and final consumption within a region, and exports from the region, both interregional and international. Changes in region-serving output are generated endogenously by changes in requirements for intermediate goods and services, via input-output relationships, by changes in household, investment, government, and other final demands; and by changes in the extent of regional self-sufficiency. Changes in relative labor intensity and unexplained trend complete the equation for predicting employment in each sector. Changes in wage rates, by sector, are explained by changes in labor demand by occupation, recognizing differences in wage responsiveness among skill groups and by changes in overall labor supply due to changing population and participation rates.

For the last decade the major international agencies have forecast the possibilities for the world economy. This paper reviews these efforts. It finds that the forecasts of the agencies for the economic growth rates of the industrial and developing countries have been systematically biased, while their estimates of the locomotive effect for developing countries have become ambiguous. There has also been a systematic shift in the forecasting methods used by the agencies. In part, this pattern reflects the need to rationalize forecasts within the context of a particular theoretical-ideological perspective, increasingly strengthened by the influence of the present United States administration. Peer group and institutional pressures within the interagency system have resulted in a misplaced consensus about long-term trends, and have undermined the potential benefits of the forecasting exercise. The dangers of biased or unreliable forecasts are evident, given the influence of the forecasts on the planning activities and the style of development of so many developing countries. [ABSTRACT FROM AUTHOR]

Portes, Richard D. DECENTRALIZED PLANNING PROCEDURES AND CENTRALLY PLANNED ECONOMIES, pp. 422–429. Central planning in Eastern European nations continues in the face of decentralization. Decentralization itself is a consequence of central planning. This raises questions of price duality, and overlapping jurisdictions. Decentralization in these nations is a matter quite different from that in other states. Biblio. Nagy, Tamas. THE HUNGARIAN ECONOMIC REFORM, PAST AND FUTURE, pp. 430–435. A review of progress in implementing the Hungarian economic reforms of 1968. Great strides have been made. Exports are growing, wages are climbing slowly, and more consumer goods are on the market. Future reforms include a firmer tariff policy and increased capital for capital investment. Ames, Edward and Balassa, Bela. DISCUSSION, pp. 436–439. A closing discussion on economic planning as presented by Portes and Nagy. Historical Abstracts, Part B, Vol. 22, 1976. [ABSTRACT FROM AUTHOR]

The appropriate treatment for buyers' inflation is to cut down the excessive spending that causes it. This may be done by a restrictive monetary or fiscal policy. But if restrictive monetary or fiscal policy is used against sellers' inflation, spending is reduced when it is not excessive, so that we get a deficiency of demand, depression and unemployment. The inflation will continue, unless the induced depression is severe enough to destroy the power of sellers to raise their prices. This may call for more depression than the authorities are prepared to impose or the public willing to suffer. We then get insufficient depression to stop the inflation and we suffer from both evils at the same time. In 1958, we seem to have had sufficient depression to stop the inflation, at least temporarily, but this remedy involved a loss of output estimated at some $30 billion per annum and it severely reduced our rate of economic growth. The failure to provide full employment is a serious handicap. The loss of the $30 billion may be responsible for a fatal economizing in our expenditure on defense. The reduction in our rate of growth can make it relatively easy for the communists to realize their dream of "catching up with and surpassing" the U.S. economy.

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]

There is a pattern to urban growth which makes it possible to forecast booms in industrial areas and spot high rent residential areas in the making. Underlying principles are topography, transportation, and the uneasy dynamics of the high income class seeking better, more exclusive residential sites. Time maps, sector analyses, input-output forecasts are tools used to predict change in the megalopolis. [ABSTRACT FROM AUTHOR]

This article presents the author's opinion on how the U.S. will deal with economic growth in the 1960s. He notes that numerous forecasts have called for a decade of continued growth and economic prosperity. Some controversy has arisen over whether this growth will be enough to supply both military and civilian needs and whether this wealth will be used to the best possible advantage. He examines the most popular economic indicators, various rates of growth and some of the expected changes that will occur during the decade.

We evaluate the predictive power of leading indicators for output growth at horizons up to 1 year. We use the MIDAS regression approach as this allows us to combine multiple individual leading indicators in a parsimonious way and to directly exploit the information content of the monthly series to predict quarterly output growth. When we use real-time vintage data, the indicators are found to have significant predictive ability, and this is further enhanced by the use of monthly data on the quarter at the time the forecast is made. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Abstract: Successful portfolio management strategies partly require accurate forecasts of term spreads. Such forecasts may also be useful for policymaking since the yield curve may contain predictive information for economic growth. This study asks whether experts accurately predict term spreads. We show that the consensus forecasts from two separate panels, while superior to alternative benchmark forecasts, are free of systematic bias but unable to replicate the degree of variability in the actual change. Moreover, these forecasts are directionally accurate under symmetric loss, implying that they are of value to a market participant who assigns similar costs to incorrect upward and downward moves. [Copyright &y& Elsevier]

The article presents an assessment of the impact of credit crisis on the economy. In response to the crisis, banks cut their volume of lending to each other and the disorderly market conditions put downward interbank rates up to unusual levels. The tentative signs of stabilisation in the U.S. housing was erased by the subprime crisis. According to the article, this could put downward pressure on growth through negative wealth effects. It is also expected that the credit crunch would affect the growth in major economies.

Modern Schumpeterian growth theory focuses on the product line as the main locus of innovation and exploits endogenous product proliferation to sterilize the scale effect. The empirical core of this theory consists of two claims: (i) growth depends on average employment (i.e., employment per product line); (ii) average employment is scale invariant. We show that data on employment, R&D personnel, and the number of establishments in the US for the period 1964–2001 provide strong support for these claims. While employment and the total number of R&D workers increase with no apparent matching change in the long-run trend of productivity growth, employment and R&D employment per establishment exhibit no long-run trend. We also document that the number of establishments, employment and population exhibit a positive trend, while the ratio employment/establishment does not. Finally, we provide results of time series tests consistent with the predictions of these models. [ABSTRACT FROM AUTHOR]

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 article describes the milieu in which the U.S. President must shape his economic policy decisions, identifies his principal organizational needs and offers suggestions for organizing the advice he receives. The growing number of factors that must be taken into account also contributes to the complexity of policy making. A significant reduction in the natural, artificial, and psychological barriers to foreign trade and international capital movements has left national economies more open and more sensitive to developments in the economies of their trading partners. The blurring of the distinction between foreign and domestic policy is also revealed by the growing interest of members of the national security community in using economic means to advance foreign policy objectives. The milieu in which the president must make his economic policy decisions is also characterized by constantly changing conditions. Forecasting the pattern of economic activity for even a few months is fraught with difficulty. Most macroeconomic and microeconomic problems that the president faces have no easy solutions, but public hopes and expectations for presidential performance will probably remain high. The fragmentation of the U.S. political system and the strengthening of organized interests make the president's task of building consensus and developing support for his policies more difficult.

Delves into the expectation of success in the economy of San Diego. Contribution of chemical sensor industry in the economic development of the town; requirements for the making of artificial organs; Performance of pharmaceutical industry in San Diego; Association of San Diego with wireless communications.