Testing for a New Economy in the 1990s

Ray Fair ()

No 1388, Cowles Foundation Discussion Papers from Cowles Foundation, Yale University

Abstract: This paper examines how much structural change there was in the U.S. economy in the last half of the 1990s. The results are consistent with the hypothesis that there was only one major structural change, namely the huge increase in stock prices relative to earnings. All other large changes can be explained by this change. There is no obvious reason for the large increase in stock prices relative to earnings. Increased productivity growth does not appear to be an answer since the data show that there was only a modest increase in long run productivity growth in the last half of the 1990s. Also, earnings growth and the share of earnings in the economy were not unusually large.

Keywords: New economy; Stability tests (search for similar items in EconPapers)
JEL-codes: E10 C52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
Date: Written
Note: CFP 1194.
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Published in Business Economics (January 2004), 39(1): 43-53

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Working Paper: Testing for a New Economy in the 1990s (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:cwl:cwldpp:1388

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