Economic growth.

• Position: Conference

Economic Growth

The NBER held a Conference on Economic Growth in Cambridge on October 6-7. Robert J. Barro, NBER and Harvard University, and Paul M. Romer, NBER and University of Chicago, organized the following program:

Jess Benhabib and Boyan Jovanovic, New York

University, "Externalities and Growth Accounting"

Discussant: Stanley Fischer, NBER, MIT, and World

Bank

Robert J. Barro, and Xavier Sala-I-Martin, Harvard

University, "Economic Growth and Convergence

across the United States"

Discussant: Anne O. Krueger, NBER and Duke

University

Dale W. Jorgenson, Harvard University, and Peter J.

Wilcoxen, University of Melbourne,

"Environmental Regulation and U.S. Economic Growth"

Discussant: Timothy J. Kehoe, Federal Reserve Bank

of Minneapolis

Ricardo J. Caballero, Columbia University, and

Richard Lyons, NBER and Columbia University, "The

Role of External Economies in U.S. Manufacturing"

(NBER Working Paper No. 3033) (This paper is

summarized in "Studies of Firms and Industries" in this

issue.)

Discussant: Kevin M. Murphy, NBER and University

of Chicago

Philippe Aghion, MIT, and Peter Howitt, University

of Western Ontario, "A Model of Growth through

Creative Destruction"

Discussant: Nancy Stokey, Northwestern University

Sebastian Edwards, NBER and University of

California at Los Angeles, "Openness, Outward

Orientation, Trade Liberalization, and Economic

Performance in Developing Countries" (NBER Working

Paper No. 2908)

Discussant: Rudiger W. Dornbusch, NBER and MIT

Jeremy Greenwood, Federal Reserve Bank of

Minneapolis, and Boyan Jovanovic, "Financial

Development, Growth, and the Distribution of Income"

Discussant: Kenneth S. Rogoff, NBER and University

of California at Berkeley

Using quarterly and annual postwar U.S. aggregate data on the growth of output, labor, and capital, Benhabib and Jovanovic find no evidence of increasing returns to scale in the aggregate production function, or of a large positive externality on the capital input. This agrees with the findings of most others who look at the microdata on R and D expenditures. They also examine inputs and output over longer periods. They find that the simultaneity problems caused by the correlation between the inputs and the production function disturbance persist in long-run averages of growth rates. The puzzle that the macrodata present, then, is not that externalities are very large but that we need not appeal to externalities at all to understand long-run movements in aggregates.

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