In recessions, all types of investment fall, including employers' investment in job creation. The stock market falls more than in proportion to corporate profit. The discount rate implicit in the stock market rises, and discounts for other claims on business income also rise. According to the...

The financial crisis and ensuing Great Recession left the U.S. economy in an injured state. In 2013, output was 13 percent below its trend path from 1990 through 2007. Part of this shortfall--2.2 percentage points out of the 13--was the result of lingering slackness in the labor market in the...

Among the ways a product or labor market might operate is the following: All firms quote the same price or wage. Customers or job-seekers search among sellers until they find one willing to sell them or employ them. They do not need to consider the possibility that another seller or employer...

In 1957, Robert Solow published a paper that provided the theoretical foundation for almost all subsequent work on productivity measurement. Although most applications of Solow's method have measured trends over fairly long time periods, the method also has important uses at higher frequencies....

One of the productive activities engaging the work force is reorganizing. When factors of production are better matched, productivity is higher. The probabilistic matching model of Diamond, Mortensen, and others provides a way to make the idea of reorganization precise. Because the flow of...

This paper sets forth a simple general structural model of aggregate output, the interest rate, and the price level. The core of the model is the determination of the level of output as a product-market equilibrium, either competitive or oligopolistic, possible indeterminate because of...

Health care extends life. Over the past half century, Americans have spent a rising share of total economic resources on health and have enjoyed substantially longer lives as a result. Debate on health policy often focuses on limiting the growth of health spending. We investigate an issue...

Spontaneous shifts in output originating within the business sector are an important factor in aggregate fluctuations. This paper develops a simple two-component decomposition of the movement of real GNP. One component is the path that GNP would have followed in order to deliver the volume of...

Previous research has suggested that firms in a number of industries have considerable market power, in the sense that their prices exceed their marginal costs. However, the observed profits of those industries are not nearly as high as would occur under full exploitation of the market power...

Macroeconomists%u2014%u2014especially those studying monetary policy%u2014%u2014often view the business cycle as a transitory departure from the smooth evolution of a neoclassical growth model. Important ideas contributed by Friedman, Lucas, and the developers of the sticky-price macro model...