Unmeasured investment and the puzzling U.S. boom in the 1990s

Ellen McGrattan and Edward Prescott

No 369, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: For the 1990s, the basic neoclassical growth model predicts a depressed economy, when in fact the U.S. 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 micro and macro evidence motivating our extension, and the theory?s predictions are in conformity with U.S. national accounts and capital gains. We compare accounting measures with corresponding measures for our model economy. We find that standard accounting measures greatly understate the 1990s boom. ; Earlier title: Why did U.S. market hours boom in the 1990s? ; Earlier title: Unmeasured investment and the 1990s U.S. hours boom

Keywords: Business cycles; Productivity (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Unmeasured Investment and the Puzzling US Boom in the 1990s (2010)
Working Paper: Unmeasured Investment and the Puzzling U.S. Boom in the 1990s (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:369

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