Monetary economics.

• Position: National Bureau of Economic Research's Program on Monetary Economics

The NBER's Program on Monetary Economics met in Cambridge on April 24. John Shea, NBER and the University of Maryland, and David N. Well, NBER and Brown University, organized the meeting, at which these papers were discussed:

Bruce Hamilton, Johns Hopkins University, "The True Cost of Living: 1974-1991"

Discussant: Matthew D. Shapiro, NBER and University of Michigan

Joseph Peek, Boston College, and Eric Rosengren, Federal Reserve Bank of Boston, "Collateral Damage: Effects of the Japanese Real Estate Collapse on Credit Availability and Real Activity in the United States"

Discussant: John Driscoll, Brown University

Karen Dynan, Federal Reserve Board; Jonathan S. Skinner, NBER and Dartmouth College; and Stephen B. Zeldes, NBER and Columbia University, "Do the Rich Save More?"

Discussant: Christopher D. Carroll, NBER and Johns Hopkins University

Susanto Basu, NBER and University of Michigan; John Fernald, Federal Reserve Board; and Miles S. Kimball, NBER and University of Michigan, "Are Technology Improvements Contractionary?"

Discussant: Michael Kiley, Federal Reserve Board

Argia Sbordone, Princeton University, "Prices and Unit Labor Costs: Testing Models of Pricing Behavior"

Discussant: Mark Bils, NBER and University of Rochester

Robert B. Barsky, NBER and University of Michigan, and Lutz Kilian, University of Michigan, "Money, Stagflation, and Oil Prices: A Re-Interpretation"

Discussant: Mark W. Watson, NBER and Princeton University

Using the Panel Study of Income Dynamics (PSID), Hamilton estimates a demand function for food consumed at home for 1974 to 1991, which he then uses to estimate the "true cost of living" over that period. He finds that, on average, the PSID sample of white households spent 16.64 percent of its income on at-home food in 1974. By 1991, this share had fallen to 12.04 percent. CPI-deflated per-household income grew 7 percent over this time span. Given the estimated income coefficient in the demand function, this income growth is sufficient to explain just over half a percentage point of the decline in spending on food at home. Declining food prices explain perhaps as much as 1 percentage point of the decline; other factors explain less than 0.1 point of the decline; that leaves 3 points to be explained by bias in the CPI (Consumer Price Index). For blacks, food's share fell from 21.17 percent to 12.44 percent. Approximately 0.8 points of this decline can be explained by growth in measured income, another point by...