Macro Roundup

when it rains it pours. more evidence there is a productivity slowdown from the Fernald. some interesting stuff on intangible output and capital deepening, accounting for which still doesn’t effect the slowdown. for example including intangibles doesn’t effect the TFP slowdown (footnote 18) mirrors the other paper, different methodology

“…The “productivity paradox 2.0” remains alive: Despite ongoing IT-related innovation, aggregate U.S. productivity growth slowed markedly after 2004 or so. We propose several adjustments to IT-related hardware, software, and services. The good news is that the adjustments make recent growth in GDP and investment look modestly better than recorded. The bad news is that it makes the paradox even worse—the slowdown in labor productivity is even larger after our durable-goods adjustments, while the slowdown in TFP is not much affected. The reason is that mismeasurement was substantial in the 1995-2004 period as well as more recently, and rising import penetration for computers and communications equipment means that domestic production (which matters for GDP) has fallen over time.Moreover, that the slowdown was broadbased suggests that ongoing innovation in IT is not substantially spilling over into other areas.Other measurement challenges, such as digital services, globalization, and fracking, go in the right direction but are small.Other evidence also suggests that true underlying growth is relatively modest. First, the U.S. productivity slowdown has been mirrored in many parts of the world (Eichengreen et al., 2015; Cette, et al, 2016). This suggests underlying macroeconomic factors may be driving the slow pace of growth, given the varied sources and methods used across national statistical systems. Syverson (2015) finds that the slowdown across countries is not correlated with IT production or use, again suggesting that the problem is not mismeasurement related to IT goods or services. Second, the decline in economic dynamism—both in the form of fewer startups and slower reallocation of labor resources in response to productivity shocks—supports the idea that productivity-enhancing innovations are diffusing through the economy more slowly (Decker et al., 2015; Haltiwanger et al., 2015). Relatedly, Mandel (2015) looks at labor market metrics such a such as occupational employment and help-wanted ads, and finds evidence consistent with tremendous occupational change in narrow segments of the economy (such as IT and oil/gas extraction), but little evidence suggesting widespread, rapid innovation.If not mismeasurement, why did productivity growth slow? The slowdown predated the Great Recession, which suggests that event was not the story—or, at least, not the whole story. Given that growth was similar in the 1970s and 1980s as it has been since 2004,a plausible story is that it was the fast-growth 1995-2004 period that was the anomaly. With the Internet, the reorganization of distribution sectors, and the like, a lot of things came together in a short period of time. With hindsight, that looks like a one-time upward shift in the level of productivity rather than a permanent increase in its growth rate. Looking forward, we could get another wave of the IT revolution. Indeed, it is difficult to say with certainty what gains may yet come from cloud computing, the internet of things and the radical increase in mobility represented by smartphones. But, since the early 1970s, modest and incremental productivity growth has more often been the norm. Changes in overall welfare are somewhat harder to assess. Transformative gains related to mobile technologies and the Internet clearly raise welfare. We argued that most of those gains properly belong outside the purview of market-sector GDP—and proposals to incorporate them into GDP raise concerns. But that does not mean these innovations are not valued by households—they are.Still, the available estimates of the welfare gains (based on the value of leisure time) suggests that “free” digital services add the equivalent of perhaps 3/10ths percent of GDP per year to wellbeing. That is small relative to the 1-3/4 percent slowdown in labor productivity growth in the business sector from 2004-2014…..Finally, we conclude with implications for policymakers. Slow productivity growth, if it persists, implies slow potential growth going forward. Benefits in the nonmarket sector can offset that somewhat for well-being, but it does not help with taxes or the budget….”

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David Byrne, John Fernald, Marshall Reinsdorf, “Does the United States have a Productivity Slowdown or a Measurement Problem?”Brookings Papers on Economic Activity, March 1, 2016. Available at:http://www.brookings.edu/~/media/projects/bpea/spring-2016/byrneetal_productivitymeasurement_conferencedraft.pdf

“…Past good deeds can liberate individuals to engage in behaviors that are immoral, unethical, or otherwise problematic, behaviors that they would otherwise avoid for fear of feeling or appearing immoral. We review research on this moral self‐licensing effect in the domains of political correctness, prosocial behavior, and consumer choice. We also discuss remaining theoretical tensions in the literature: Do good deeds reframe bad deeds (moral credentials) or merely balance them out (moral credits)? When does past behavior liberate and when does it constrain? Is self‐licensing primarily for others’ benefit (self‐presentational) or is it also a way for people to reassure themselves that they are moral people? Finally, we propose avenues for future research that could begin to address these unanswered questions….”

Merritt, Anna, Daniel Effron and Benoit Monin, "Moral Self-Licensing: When Being Good Frees Us to Be Bad,"Social and Personality Psychological Compass, 2010. Available at:http://www-psych.stanford.edu/~monin/papers/Merritt,%20Effron%20%26%20Monin%202010%20Compass%20on%20Moral%20Licensing.pdf