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American Economic Journal: Macroeconomics: Vol. 2 No. 4 (October 2010)
AEJ: Macro Volume. 2, Issue 4 | 
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AEJ: Macro Forthcoming Articles
Unmeasured Investment and the Puzzling US Boom in the 1990s
Article Citation
McGrattan, Ellen R., and
Edward C. Prescott. 2010. "Unmeasured Investment and the Puzzling US Boom in the 1990s."
American Economic Journal: Macroeconomics,
2(4): 88-123.
DOI: 10.1257/mac.2.4.88
DOI: 10.1257/mac.2.4.88
Abstract
For the 1990s, the basic neoclassical growth model predicts a depressed economy, when in fact the US economy boomed. We extend the base model by introducing intangible investment and non-neutral technology change with respect to producing intangible investment goods and find that the 1990s are not puzzling in light of this new theory. There is microeconomic and macroeconomic evidence motivating our extension, and the theory's predictions are in conformity with US national accounts and capital gains. We compare accounting measures with corresponding measures for our model economy and find that standard accounting measures greatly understate the 1990s boom. (JEL E22, E23, O33, O47)
Article Full-Text Access
Full-text Article
Additional Materials
Download Data Set (9.93 MB) | Online Appendix (458.68 KB)
Authors
McGrattan, Ellen R. (Federal Reserve Bank of Minneapolis and U MN)
Prescott, Edward C. (Federal Reserve Bank of Minneapolis and AZ State U)
Prescott, Edward C. (Federal Reserve Bank of Minneapolis and AZ State U)
JEL Classifications
E22: Capital; Investment; Capacity
E23: Macroeconomics: Production
O33: Technological Change: Choices and Consequences; Diffusion Processes
O47: Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
E23: Macroeconomics: Production
O33: Technological Change: Choices and Consequences; Diffusion Processes
O47: Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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