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By Alexander J. Field Ph.D.
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Extra resources for A Great Leap Forward: 1930s Depression and U.S. Economic Growth
When inputs are measured conventionally, trend growth rates in total factor productivity varied substantially across different subperiods within both centuries, but the United States has not, at least since the end of the Civil War, moved systematically toward higher TFP growth rates. During the last third of the twentieth century, and in the absence of any of the multitudinous add-ons proffered by Denison or Jorgenson and Griliches, the residual, all by itself, almost completely vanished. Once again, and indeed to an even greater degree than at the end of the nineteenth century, the growth of output could be explained almost entirely as the consequence of the growth of inputs.
In The Global Economy in the 1990s: A Long Run Perspective, ed. Paul Rhode and Gianni Toniolo, 89–117. Cambridge: Cambridge University Press (chapter 5). Field, Alexander J. 2007. S. ” Explorations in Economic History 43 (January): 43–58 (chapter 8). Field, Alexander J. 2007. S. ” Cliometrica 1 (April): 63–90 (chapters 2 and 4). Field, Alexander J. 2008. S. ” Economic History Review 61 (August): 672–694 (chapter 3). Field, Alexander J. 2009. S. ” Journal of Macroeconomics 31 (March): 173–190 (chapter 6).
Demand shocks and supply shocks can be either positive or negative. At a business cycle peak an economy is at or near capacity. In a downturn, output will fall below potential as an output gap widens and unemployment grows. Given the way the rate is calculated, some unemployment is socially beneficial. Individuals unemployed but actively seeking work are considered to be in the labor force. New entrants or reentrants, along with those who have quit or been fired from previous jobs, don’t necessarily accept the first employment offer they encounter, and up to a point this search process is beneficial for both employees and employers.