Population and Economic Change in Developing Countries a Conference Report Universities-National Bureau Committee for Economic Research

Total Page:16

File Type:pdf, Size:1020Kb

Population and Economic Change in Developing Countries a Conference Report Universities-National Bureau Committee for Economic Research Population and Economic Change in Developing Countries A Conference Report Universities-National Bureau Committee for Economic Research Number 30 National Bureau of Economic Research Population and Economic Change in Developing Countries Edited by Richard A. Easterlin The University of Chicago Press Chicago and London The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London © 1980 by the National Bureau ofEconomic Research All rights reserved. Published 1980 Midway Reprint edition 1987 Printed in the United States ofAmerica ISBN 0-226-18027-1 National Bureau of Economic Research Arthur F. Burns, honorary chairman Charles E. McLure, Jr., vice-president James J. O'Leary, chairman Charles A. Walworth, treasurer Eli Shapiro, vice-chairman Sam Parker, director of finance and Martin Feldstein, president administration Directors at Large Moses Abramovitz Eugene P. Foley Peter G. Peterson Atherton Bean Edward L. Ginzton Robert V. Roosa Andrew F. Brimmer David L. Grove Richard N. Rosett Otis F. Brubaker WaIter W. Heller Bert Seidman Arthur F. Burns Walter E. Hoadley Eli Shapiro George T. Conklin, Jr. Roy E. Moor Arnold M. Soloway Solomon Fabricant Geoffrey H. Moore Stephen Stamas Martin Feldstein James J. O'Leary Lazare Teper Directors by University Appointment Gardner Ackley, Michigan Maurice W. Lee, North Carolina G. L. Bach, Stanford James L. Pierce, California, Berkeley Charles H. Berry, Princeton Almarin Phillips, Pennsylvania Otto Eckstein, Harvard Lloyd G. Reynolds, Yale Walter D. Fisher, Northwestem Robert M. Solow, Massachusetts John H. Kareken, Minnesota Institute of Technology J. C. LaForce, California, Los Angeles Henri Theil, Chicago Robert J. Lampman, Wisconsin William S. Vickrey, Columbia Directors by Appointment of Other Organizations Eugene A. Birnbaum, American Douglass C. North, Economic History Management Associations Association Carl F. Christ, American Economic Rudolph A. Oswald, American Federa- Association tion of Labor and Congress of Robert G. Dederick, National Associa- Industrial Organizations tion of Business Economists Charles A. Walworth, American Stephan F. Kaliski, Canadian Eco- Institute of Certified Public nomics Association Accountants Franklin A. Lindsay, Committee for G. Edward Schuh, American Agricul- Economic Development tural Economics Associatic 11 Paul W. McCracken, American James C. Van Horne, American Statistical A ssociation Finance Association Directors Emeriti Percival F. Brundage Gottfried Haberler Boris Shishkin Emilio G. Collado Albert J. Hettinger, Jr. Willard L. Thorp Frank W. Fetter George B. Roberts Joseph H. Willits Thomas D. Flynn Murray Shields Theodore O. Yntema Since this volume is a record of conference proceedings, it has been exempted from the rules governing critical review of manuscripts by the Board of Directors of the National Bureau (resolution adopted 6 July 1948, as revised 21 November 1949 and 20 April 1968). Universities-National Bureau Committee for Economic Research This committee is a cooperative venture of universities and the National Bureau. Its guiding objective is the encouragement of economic research on problems susceptible of objective treatment and of sufficiently broad scope to merit attention by institutions serving a scientific and public interest. Participating Universities and Their Representatives Brown, Jerome L. Stein New School for Social Research, California (Berkeley), Daniel Thomas Vietorisz McFadden New York, M. Ishaq Nadiri California (Los Angeles), J. C. New York State (Buffalo), La Force Daniel Hamberg California (San Diego), Robert E. North Carolina, Henry A. Latane Engle Northwestern, Robert Eisner Carnegie-Mellon, Edward C. Prescott Ohio State, Donald O. Parsons Chicago, Lester G. Telser Pennsylvania, Jere R. Behrman Columbia, Robert Mundell Pittsburgh, S. H. Chou Cornell, S. C. Tsiang Princeton, Edwin S. Mills Duke, T. Dudley Wallace Purdue, Patric H. Hendershott Harvard, John V. Lintner Queen's, Martin F. J. Prachowny Illinois, Robert Resek Rochester, Walter Y. Oi Indiana, Franz Gehrels Stanford, Moses Abramovitz Iowa State, Dudley G. Luckett Texas, Samuel L. Myers, Jr. Johns Hopkins, Carl F. Christ Toronto, Richard Bird Maryland, Barbara Bergman Vanderbilt, Anthony M. Tang Massachusetts Institute of Technology, Virginia, Richard T. Selden Richard S. Eckaus Washington (Saint Louis), McGill, Alex G. Vicas Hyman Minsky Michigan, Harold T. Shapiro Washington (Seattle), Richard Michigan State, Victor Smith W. Parks Minnesota, James M. Henderson Wisconsin, Leonard W. Weiss Yale, Richard Ruggles National Bureau of Economic Research Representative Robert E. Lipsey Members at Large Irma Adelman Daniel Creamer Walter S. Salant Bela A. Balassa Frank de Leeuw George J. Stigler Carl E. Beigie The officers of the Universities-National Bureau Committee are: Edwin S. Mills, chairman; Leonard W. Weiss, vice-chairman; and Christine Mortensen, secretary. The members of the Executive Committee are: Irma Adelman, Richard Bird, Robert Eisner, Robert E. Lipsey, Dudley G. Luckett, Edwin S. Mills, and Leonard W. Weiss..
Recommended publications
  • Chronicling 100 Years of the U.S. Economy Robert Eisner
    Chronicling Chronicling 100 Years100 Years of the of the U.S. EconomyU.S. Economy March 2021 Volume 101, Number 3 Top Influencers The Bureau of Economic Analysis (BEA) and its journal, the Survey of Current Business, are respected sources of data on the health of our national economy due in large part to the individuals who influenced BEA and its predecessor agencies over the past century. From economic theory to the mechanics of producing reliable statistics, their contributions helped make BEA and its accounts the reliable, authoritative sources of economic data they are today. The Survey has chronicled the evolution of BEA's output for almost a century. As we celebrate the centennial of the Survey, some of these top influencers will be profiled on the centennial website. This month, we present economist Robert Eisner. Robert Eisner Extending the National Economic Accounts By Ralph Rodriguez In depicting the traits of whom he called the “master economist,” John Maynard Keynes once wrote, “He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought.”1 Robert Eisner—economist, advisor, and perpetual educator—masterfully wove the empirical and theoretical to help shape the system of economic measurement in the United States and across the globe. Eisner was born in Brooklyn, NY, in 1922. After earning his M.A. from Columbia University in 1942, he enlisted in the U.S. Army and served in France during World War II. After the war, he would marry and go Robert Eisner on to earn his Ph.D.
    [Show full text]
  • Crossing Learning Boundaries by Choice
    Crossing Learning Boundaries By Choice Black People must save themselves a memOlf Charles Z. Wilson authorrlous~ AuthorHouse™ Acknowledgments 1663 Liberty Drive, Suite 200 \"" l Bloomington, IN 4740], / -, .. -/ www.authorhouse.com -"- 1, " <-"'n_~_._._._._._ .. __ ~ Phone: 1-800-839-8640 lhis book is a work ifnon-jiction. Unless otherwise noted, the author and the publisher The decade of the 70's was a time of change in UCLNs Office of make no explicit guarantees as to the accuracy ifthe i11formation contained in this book Academic Programs, and I am extremely thankful for the creative and in some cases, names ifpeople andplaces have been altered to protect their privacy. support of Meg Ross-Price, Vicki Nock, Susan Meives, and Nancy © 2008 Charles Z. Wilson. All rights reserved. Cutter during those years. Meg pushed me constantly to document my initiatives as we crossed new social, cultural, and educational No part ifthis book may be reproduced, stored in a retrieval system, or boundaries in academic and student development. She brought transmitted by any means without the written permission ifthe author. together papers, manuscripts, and memoranda from my years at First published by Auth(JrHouse 2/6/2008 Carnegie and SUNY and set in motion the practice of documenting our office activities. Vicki and Susan monitored and evaluated ISBN: 978-1-4343-5237-8 (sc) projects and programs, and as such, they steered, guided, and added ISBN: 978-1-4343-5238-5 (he) further papers, notes, and correspondence to Meg's archival base. Were it not for these well-organized archived materials, writing this book would have been a long, arduous process with far less depth.
    [Show full text]
  • Hallsargent11.Pdf
    American Economic Journal: Macroeconomics 3 (July 2011): 192–214 http://www.aeaweb.org/articles.php?doi 10.1257/mac.3.3.192 = Contents Interest Rate Risk and Other Determinants of Post-WWII US Government Debt GDP Dynamics† 192 I. Interest Payments in the Government Budget Constraint 193 / A. Accounting Details 194 Interest Rate Risk and Other Determinants of Post-WWII B. Data 197 † C. Previous Work 199 US Government Debt GDP Dynamics II. Contributions to the Evolution of the US Debt-GDP Ratio 200 / III. Concluding Remarks 209 Appendix: Reconciling Our Estimates with the Government’s 210 By G#$%&# J. H'(( ')* T+$,'- J. S'%&#).* References 213 This paper uses a sequence of government budget constraints to motivate estimates of returns on the US Federal government debt. Our estimates differ conceptually and quantitatively from the inter- est payments reported by the US government. We use our estimates to account for contributions to the evolution of the debt-GDP ratio made by in!ation, growth, and nominal returns paid on debts of dif- ferent maturities. JEL E23, E31, E43, G12, H63 ( ) his paper shows contributions that nominal returns, the maturity composition of the debt, in!ation, and growth in real gross domestic product GDP have made T ( ) to the evolution of the US debt-GDP ratio since World War II. Among the questions we answer are the following. Did the United States in!ate away much of the debt by using in!ation to pay negative real rates of return? Occasionally, but not usually. Did high net-of-interest de"cits propel the debt-GDP ratio upward? Considerably during World War II, but not too much after that.
    [Show full text]
  • The New Financial Order Shiller.Front 12/30/02 4:01 PM Page Ii Shiller.Front 12/30/02 4:01 PM Page Iii
    Shiller.front 12/30/02 4:01 PM Page i The New Financial Order Shiller.front 12/30/02 4:01 PM Page ii Shiller.front 12/30/02 4:01 PM Page iii The New Financial Order risk in the 21st century Robert J. Shiller Princeton University Press . Shiller.front 12/30/02 4:01 PM Page iv Copyright © 2003 by Robert J. Shiller Published by Princeton University Press 41 William Street Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press 3 Market Place Woodstock, Oxfordshire OX20 1SY All Rights Reserved Library of Congress Cataloging-in-Publication Data Shiller, Robert J. The new financial order : risk in the 21st century / Robert J. Shiller. p. cm. Includes bibliographical references and index. ISBN 0-691-09172-2 (alk. paper) 1. Risk management. 2. Information technology. I. Title. HD61 .S55 2003 368—dc21 2002042563 British Library Cataloging-in-Publication Data is available Book design by Dean Bornstein This book has been composed in Adobe Galliard and Formata by Princeton Editorial Associates, Inc., Scottsdale, Arizona Printed on acid-free paper. ∞ www.pupress.princeton.edu Printed in the United States of America 10987654321 Shiller.front 12/30/02 4:01 PM Page v I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favor to men of skill; but time and chance happeneth to them all. —Ecclesiastes 9:11 Shiller.front 12/30/02 4:01 PM Page vi Shiller.front 12/30/02 4:01 PM Page vii Contents Preface ix Acknowledgments
    [Show full text]
  • Robert Eisner's Contributions to Economic Measurement, January 1999
    8 survey of current business January 1999 Robert Eisner, 1922–98 Robert Eisner’s Contributions to Economic Measurement robert eisner, william r. Kenan Emeritus Profes- problems in the measures of income and output and of sor of Northwestern University, died late last year. He investment, savings, and deficits. He pointed out that will be remembered for his many contributions to the conventional income and output measures excluded understanding of investment and consumption behav- household production, capital gains, the services of ior, macroeconomic theory, and fiscal and monetary consumer durables and government capital, and the policy. At the Bureau of Economic Analysis (bea) eVects of inflation on asset values and that these exclu- and at economic statistics agencies around the world, sions aVected our view of trends in income, output, he will also be remembered for his work on exten- and productivity. For example, the entry of women sions of the national economic accounts, which, in into the labor force may result in a decline in meas- some sense, may be his most fundamental contribu- ured labor productivity if they disproportionately fill tion. Indeed, his approach to economics is illustrated lower paying or lower productivity jobs. However, it by his choice of topic for his 1988 presidential address may result in an increase in actual productivity if these to the American Economic Association—“Divergences jobs are more productive than the unpaid jobs that of Measurement and Theory and Some Implications they performed in the home. 1 for Economic Policy.” A decade earlier, he reminded In addition, Eisner pointed out that assessing the other economists that while we may “know the pitfalls adequacy of either public or private investment and of measurement without theory...we may occasionally saving requires that investment measures consistently forget the strength and life that theory must draw from 2 include all purchases of goods and services that pro- measurement.” His empirical work continuously in- duce a stream of benefits over time.
    [Show full text]
  • Graduate Connection
    Graduate Connection Vol. 4 No. 2 December 1998 INSIDE Happy Holidays! Asher Wolinsky has been named the Alfred W. Chase Professor of Business From the Department Chair 1 Institutions. Teaching Matters 2 The faculty and staff extend their best Burt Weisbrod has been named to the From the Director of wishes for a happy holiday season. The National Advisory Research Resources Graduate Studies 4 University will be officially closed on Council of the National Institutes of From the Graduate Thursday December 24, Friday 25, Health. Joe Altonji was recently Secretary's Office 5 Thursday 31, and Friday January 1. The appointed to the Committee on National Funding 5 winter quarter commences on Monday Statistics of the National Research Council. Notes 6 January 4. Chuck Manski was appointed Chair of a new National Research Council Committee on Data and Research for Policy on Illegal From the Department Drugs. Joel Mokyr has been elected to the Chair . executive committee of NBER. Bruce Meyer has been reappointed to the editorial board of the Journal of Public Robert Eisner (1922-1998) Economics, and Joe Ferrie serves on the editorial board of the Journal of Economic Robert Eisner, Kenan Emeritus History. Dale Mortensen is the founding Professor of Economics, passed away on editor of the new Review of Economic November 25. Bob was a member of this Dynamics. Martin Eichenbaum has been department since 1952, and former elected to be a fellow of the Econometric president of the American Economic Society. In addition he has become an Association. While he retired from associate editor of the Journal of Monetary graduate teaching in 1991, he continued to Economics, the Review of Economic work on issues of national importance and Dynamics, and the Journal of was one of our most distinguished, active, Macroeconomics.
    [Show full text]
  • Robert Eisner's Common Sense Commitment to Full Employment and Activist Fiscal Policy
    JOURNAL OF ECONOMIC ISSUES jei Vol. XXXIII No. 2 June 1999 Roundtable on Employment Policy Introduction: Robert Eisner's Common Sense Commitment to Full Employment and Activist Fiscal Policy Mathew Forstater When Robert Eisner was invited to participate in the AFEE Roundtable on Em- ployment Policy, he not only accepted the invitation on the spot, but also immedi- ately said that he would speak about "Employment Policy and the NAIRU." For years, he insisted that the NAIRU was a theoretically flawed and socially harmful concept justifying the politically enforced unemployment of milhons of workers in the name of price stability. Eisner saw the recent drop in the official unemployment rate to well below 5 percent without any signs of inflation whatsoever as an oppor- tunity to slay the NAIRU dragon once and for all. Activist fiscal poUcy should be utilized to push the official rate down further and promote full employment. Follow- ing his death on November 25, 1998, at age 76, the Roundtable participants, Wil- liam A. Darity Jr., Mathew Forstater, James K. Gaibraith, Philip Harvey, Robert Kuttner, and L. Randall Wray, with the support of AFEE conference organizer Ronnie J. Philhps and Journal of Economic Issues editor Anne Mayhew, decided to dedicate the Roundtable and this symposium to Robert Eisner's life and work. While Eisner was a gifted technical economist, no doubt contributing to his rec- ognition within the mainstream of the discipline (e.g., his election as president of the American Economics Association in 1987), his ideas were rooted in something missing from much of the disciphne: common sense.
    [Show full text]
  • Information and Uncertainty
    ¶ 1 TheEconomics of Information and Uncertainty 7 I A Conference Report Universities—National Bureau Committee for Economic Research Number 32 National Bureau of Economic Research The Economics of Information and Uncertainty Edited by John J. McCall The University of Chicago Press Chicago and London S / I JOHN J. MCCALL IS professorof economics at the University of California, Los Angeles, and a consultant at the RAND Corpora- tion. He is the author (with Dale Jorgenson and Roy Radner) of OptimalReplacement Policy andIncomeMobility, Racial Discrim- ination, and Economic Growth andthe editor (with Steve Lipp- man) ofStudies in the Economics of Search. TheUniversity of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London ©1982by the National Bureau of Economic Research All rights reserved. Published 1982 Printed in the United States of America 898887868584838254321 Libraryof Congress Cataloging in Publication Data Mainentry under title: The Economics of information and uncertainty. (A Conference report / Universities—National Bureau Committee for Economic Research ; no. 32) Bibliography: p. Includes indexes. 1.Uncertainty (Information theory)—Congresses. 2. Risk—Congresses.3. Economics—Decision making—Statistical methods—Congresses. I.McCall, John Joseph. 1933- . II.Series: Conference report (Universities—National Bureau Committee for Economic Research) HB133.E34 338.5 81-15930 ISBN 0-226-55559-3 AACR2 - National Bureau of Economic Research Officers Eli Shapiro. chairman David G. Hartnian, executivedirector FranklinA. Lindsay, vice-chairman CharlesA.Walworth,treasurer Martin Feldstein, president SamParker, director of finance and administration Directorsat Large Moses Abramovitz Franklin A. Lindsay Richard N. Rosett George T. Conklin, Jr. Roy E. Moor Bert Seidman Morton Ehrlich Geoffrey H. Moore Eli Shapiro Martin Feldstein Michael H.
    [Show full text]
  • Growth and Equity with Endogenous Human Capital: Taiwan's Economic Miracle Revisited
    Federal Reserve Bank of Dallas presents RESE~FlCH PAPER No. 9325 Growth and Equity with Endogenous Human Capital: Taiwan's Economic Miracle Revisited by Maw-Lin Lee University of Missouri Ben-Chieh Liu Chicago State University Ping Wang, Research Department Federal Reserve Bank of Dallas and The Pennsylvania State University July 1993 This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library ([email protected]) Growth and Equity with Endogenous Human Capital: Taiwan's Economic Miracle Revisited Maw-Lin Lee University of Missouri Ben-Chieh Liu Chicago State University Ping Wang, Federal Reserve Bank of Dallas and The Pennsylvania State University The views expressed in this article are solely those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or to the Federal Reserve System. GROWTH AND EQUITY WITH ENDOGENOUS HUMAN CAPITAL: TAIWAN'S ECONOMIC MIRACLE REVISITED Maw-Lin Lee University of Missouri Ben-Chieh Liu Chicago State University Ping Wang Pennsylvania State University and Federal Reserve Bank of Dallas May 1993 ABSTRACT: We adopt an endogenous growth model to reexamine the major determi­ nants of economic growth, income distribution and their dynamic interactions in a newly­ industrialized country, Taiwan, 1964-1986. 3SLS estimations from a four-equation system indicate that human capital evolution was crucial in achieving Taiwan's economic miracle: the rapid human capital accumulation enlarged the labor income share, which, coupled with an increased use of progressive labor income taxes, led also to a more equitable distribution of income. This finding therefore supplements, in part, the Kuznets hypothesis in explaining the development processes in several newly industrialized economies in general and in Taiwan in particular.
    [Show full text]
  • 268 HYMAN P. MINSKY COLLECTION: FOLDER LIST the Levy Economics Institute of Bard College Bruce Macmillan, Project Archivist March 2009
    268 HYMAN P. MINSKY COLLECTION: FOLDER LIST The Levy Economics Institute of Bard College Bruce MacMillan, Project Archivist March 2009 Pages Location/Contents BOX 33: TEACHING AND RESEARCH NOTES: BOX 1 OF 2 9 FOLDER: Hyman P. Minsky (Washington University, St. Louis, Mo.). Securitization. Handout Econ 335A. Fall 1987. Notes prepared for discussion first on June 27, 1987. Edited and expanded Aug. 1987. Corrected in Sept. 1987. [7 copies] [“At the Annual Banking Structure and Competition Conference of the FRB of Chicago in May 1987, the buzzword in the corridors and by many of the speakers was ‘that which can be securitized will be securitized’…] 8 -“Special Report on Securitization”, The Vanderwicken Report On Financial Industry Change: The Monthly Briefing on Major Trends. New Hope, Pa., Feb. 1986. 4 FOLDER: Hyman P. Minsky. Glossary of Quotations from: Adam Smith. The Wealth of Nations (1776), and John Maynard Keynes. The General Theory of Unemployment, Interest and Money. London, England: MacMillan and Co., 1936. [2 copies] 14 FOLDER: Hyman P. Minsky. Notebook of Economic Theories, with one insert page. (Undated, 1980s) [“4 Types of Financial Structure”, “How Do You Create Private Wealth?”] FOLDER:!Hyman P. Minsky. Notes and Handouts (6 groups) 11 Hyman P. Minsky. Notes on The Career of Prof. Athanasios (Tom) Asimakopulos (1930-1990) and his economic theories. Handwritten. (Undated, c. 1990) 2 Hyman P. Minsky. Notes on The Various Balance of Payments Tiers. Handwritten. (Undated, c. 1990) 3 Hyman P. Minsky. Notes on The Globalization of Finance. Handwritten. (Undated, c. 1990) 7 Hyman P. Minsky. Notes on The Globalization of Finance.
    [Show full text]
  • The 1984 Economic Report of the President Hearings
    S. HRG. 98-873, Pt. 2 THE 1984 ECONOMIC REPORT OF THE PRESIDENT HEARINGS BEFORE THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES NINETY-EIGHTH CONGRESS SECOND SESSION PART 2 FEBRUARY 21, 22, AND 28, 1984 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 3M-200 0 WASHINGTON 1984 JOINT ECONOMIC COMMITTEE (Created pursuant to sec. 5(a) of Public Law 304, 79th Congress) SENATE HOUSE OF REPRESENTATIVES ROGER W. JEPSEN, Iowa, Chairman LEE H. HAMILTON, Indiana, WILLIAM V. ROTH, JR., Delaware Vice Chairman JAMES ABDNOR, South Dakota GILLIS W. LONG, Louisiana STEVEN D. SYMMS, Idaho PARREN J. MITCHELL, Maryland MACK MATTINGLY, Georgia AUGUSTUS F. HAWKINS, California ALFONSE M. D'AMATO, New York DAVID R. OBEY, Wisconsin LLOYD BENTSEN, Texas JAMES H. SCHEUER, New York WILLIAM PROXMIRE, Wisconsin CHALMERS P. WYLIE, Ohio EDWARD M. KENNEDY, Massachusetts MARJORIE S. HOLT, Maryland PAUL S. SARBANES, Maryland DANIEL E. LUNGREN, California OLYMPIA J. SNOWE, Maine BRUCE R. BARTLETT, Executive Director JAMES K. GALBRAITH, Deputy Director (11) CONTENTS WITNESSES AND STATEMENTS TUESDAY, FEBRUARY 21, 1984 Page Hamilton, Hon. Lee H., vice chairman of the Joint Economic Committee: Opening statement....................................................................................................... 1 Eisner, Robert, William R. Kenan Professor of Economics, Northwestern Uni- versity, Evanston, III ................................................................ 1 Klein, Lawrence R., Benjamin Franklin Professor of Economics,
    [Show full text]
  • Perspectives on High World Real Interest Rates
    OLIVIER J. BLANCHARD MassachusettsInstitute of Technology LAWRENCE H. SUMMERS HarvardUniversity Perspectives on High World Real Interest Rates REAL INTEREST RATES in the United States have reached extremely high levels in the last several years. This surge in real rates at all maturities has not lacked explanations. Large current and prospective deficits, tight money, better profit prospects, financial deregulation, and in- creased uncertaintyare among the factors that have been blamed for high real rates. If one looks only at the performanceof the U.S. bond market,it is difficultto discriminateamong possible explanationsfor the behavior of real interest rates. This paper examines the worldwide behavior of interest rates and the performanceof other asset markets besides the U.S. bond marketin orderto better explainhigh real rates. Even a cursory inspection of the data makes it clear that high real rates are a worldwidephenomenon. In nearlyall the majorcountries of the Organizationfor Economic Cooperationand Development(OECD), real interest rates on both short- and long-term bonds have risen dramatically.This is not surprising.Interest rates today are substantially determinedworldwide, ratherthan domestically, because a large pool of capitalflows toward nations with high real rates, tendingto equalize ratesaround the world. Thus, it is appropriateto relate nationalinterest We havebenefited from many discussions and comments from colleagues and members of the BrookingsPanel. We also want to thankJohn Campbell,Bernard Connolly, Pentti Kouri,P. A. Muet,Robert Price, and Jean de Rosenfor comments.We thank Sara Johnson of DataResources, Inc., for makingavailable to us past DRIforecasts; we also thankDRI foraccess to its database andfor computertime. MichaelBurda and James Kahn provided valuableresearch assistance.
    [Show full text]