A Discussion of Productivity Growth and Technology

Abstract

Most macroeconomists remained skeptical about the new economy until the late stages of the last expansion. Certainly, the business press and a few high-profile economists (including Federal Reserve Chairman Alan Greenspan) were quicker to proclaim a new era of faster productivity growth. But macroeconomists were naturally cautious, aware that productivity (however measured) is inherently volatile and procyclical. As robust numbers continued to come in quarter after quarter, however, many macroeconomists finally became new economy converts, persuaded that productivity had, indeed, accelerated.