Economic Fluctuations and Growth.

• Position: Brief Article

Fifty members and guests of the NBER's Program on Economic Fluctuations and Growth gathered in Chicago on October 22. Andrew Atkeson, NBER and University of Minnesota, and Matthew D. Shapiro, NBER and University of Michigan, organized this program:

Benjamin Eden, University of Haifa, "Inventories and the Business Cycle: Testing the Implications of a UST Model"

Discussant: Kenneth D. West, NBER and University of Wisconsin

Bart Hobijn, New York University, and Boyan Jovanovic, NBER and New York University, "The Information Technology Revolution and the Stock Market: Preliminary Evidence"

Discussant: Robert E. Hall, NBER and Stanford University

Jess Benhabib, New York University; Stephanie Schmiitt-Grohe, Rutgers University; and Martin Uribe, University of Pennsylvania, "The Perils of Taylor Rules"

Discussant: Peter N. Ireland, NBER and Boston College

Mark Bils, NBER and University of Rochester, and Peter J. Klenow, NBER and University of Chicago, "Quantifying Quality Growth"

Discussant: William D. Nordhaus NBER and Yale University

Robert B. Barsky, NBER and University of Michigan, and Lutz Kilian, CEPR and University of Michigan, "Money, Stagflation, and Oil Prices: A Reinterpretation"

Discussant: James D. Hamilton, NBER and University of California, San Diego

Robert Shimer, NBER and Princeton University, "The Impact of Young Workers on the Aggregate Labor Market" (NBER Working Paper No. 7306)

Discussant: Robert H. Topel, NBER and University of Chicago

Eden tests the implications of a monetary version of the Uncertain and Sequential Trading (UST) model using postwar U.S. data. These data support the hypothesis about the effect of demand shocks: low demand has a persistent positive effect on inventories and a persistent negative effect on output, prices, and labor supply (employment, hours per employee, and effort).

Since 1968, the ratio of stock market capitalization to GDP has varied by a factor of 5. In 1972, the ratio stood at above unity, but by 1974, it had fallen to 0.45, where it stayed for the next decade. It then began a steady climb, and today it stands above 2. Hobijn and Jovanovic suggest that the information technology (IT) revolution was behind this, and moreover that the capitalization/GDP ratio will probably decline and then rise after any major technological shift. Their result is based on the assumptions that: the IT revolution was anticipated by early 1973; IT was resisted by incumbent firms, which led their market value to...