Jeremy Greenwood

Discussion in Vox

Keywords: computers, technological progress, welfare gain.

Jeremy Greenwood, Juan M. Sanchez and Cheng Wang (2007), "Financing Development: The Role of Information Costs," Economie d’avant garde, Research Report No. 14, University of Pennsylvania.

Click to send comments, errors, omissions, suggestions, typos, etc to Juan M. Sanchez

Keywords: financial intermediation, economic development, costly state verification.

Jeremy Greenwood and Guillaume Vandenbroucke (2005), "Hours Worked: Long-Run Trends." Prepared for The New Palgrave Dictionary of Economics, 2^nd edition, edited by Lawrence E. Blume and Steven N. Durlauf (London: Palgrave Macmillan).

Data

Keywords: Hours worked, leisure, housework, household production, Edgeworth-Pareto complementarity/substitutability, technological progress.

Jeremy Greenwood and Nezih Guner (2008, revised), "Social Change," Economie d’avant garde, Research Report No. 9, University of Pennsylvania.

Keywords: Social change; the sexual revolution; technological progress in contraceptives, bilateral search.

Jeremy Greenwood and Nezih Guner (2008, revised), "Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households," NBER Macroeconomics Annual 2008, v. 23, forthcoming.

Midwest Macro Meetings--Plenary Address

Discussion in BusinessWeek online

Keywords: Marriage, divorce, hours worked, household production, household size, technological progress.

Jeremy Greenwood and Per Krusell (May 2007), "Growth accounting with investment-specific technological progress: A discussion of two approaches," Journal of Monetary Economics, v. 54, n. 4: 1300-1310.

Keywords: Investment-specific technological progress, capital embodiment, growth accounting.

Jeremy Greenwood and Gokce Uysal (June 2005), "New Goods and the Transition to a New Economy," Journal of Economic Growth, v. 10, n. 2: 99-134.

Keywords: New goods, structural change, technological progress, welfare indices.

Jeremy Greenwood and Ananth Seshadri (2005), "Technological Progress and Economic Transformation," in the Handbook of Economic Growth, Vol 1B, edited by Philippe Aghion and Steven N. Durlauf. Amsterdam: Elsevier North-Holland, 1225-1273.

Keywords: Child Labor, Economic Growth, Educational Attainment, Female Labor-Force Participation, Fertility, Household Production Theory, Technological Progress.

Jeremy Greenwood, Ananth Seshadri and Guillaume Vandenbroucke (March 2005), "The Baby Boom and Baby Bust," American Economic Review, v. 95, n. 1: 183-207.

The Baby Boom and Baby Bust in OECD Countries: Data and Graphs

Discussion in Deutsche Bank Research

Keywords: Baby boom, baby bust, household production, technological progress.

Jeremy Greenwood, Ananth Seshadri and Mehmet Yorukoglu (January 2005), "Engines of Liberation," Review of Economic Studies, v. 72, n. 1: 109-133.

Engines of Liberation: Additional Notes

Data – Basic Facilities and Appliances.

Discussion in The Regional Economist.

Discussion in The Wall Street Journal.

Discussion in Slate Magazine.

Discussion in The Times of India.

Keywords: female labor-force participation, household production theory, the second industrial revolution, technology adoption.

Jeremy Greenwood, Nezih Guner and John Knowles (August 2003), "More on Marriage, Fertility, and the Distribution of Income," International Economic Review, v. 44, n. 3: 827-862.

According to Pareto (1896), the distribution of income depends on ``the nature of the people comprising a society, on the organization of the latter, and, also, in part, on chance.'' In the model developed here the ``nature of the people'' is captured by attitudes toward marriage, divorce, fertility, and children. Singles search for mates in a marriage market. Married agents bargain about work, and the quantity and quality of children. They can divorce. Social policies, such as child support requirements, reflect the ``organization of the (society).'' Finally, ``chance'' is modelled by randomness in income, marriage opportunities, and marital bliss.

Keywords: Fertility; marriage and divorce; Nash bargaining; income distribution; public policy

Jeremy Greenwood and Ananth Seshadri (May 2002), "The U.S. Demographic Transition," American Economic Review (Papers and Proceedings) v. 92, n. 2: 153-159.

Between 1800 and 1940 the U.S. went through a dramatic demographic transition. In 1800 the average woman had 7 children, and 94 percent of the population lived in rural areas. By 1940 the average woman birthed just 2 kids, and only 43 percent of populace lived in the country. The question is: What accounted for this shift in the demographic landscape? The answer given here is that technological progress in agriculture and manufacturing explains these facts.

Keywords: Fertility, technological progress, agriculture, manufacturing.

JEL Classification Nos: E1, J1, O3.

S. Rao Aiyagari, Jeremy Greenwood, and Ananth Seshadri (February 2002), "Efficient Investment in Children," Journal of Economic Theory, v. 102, n. 2: 290-321.

Many would say that children are society's most precious resource. So, how should we invest in them? To gain insight into this question, a dynamic general equilibrium model is developed where children differ by ability. Parents invest time and money in their offspring, depending on their altruism. This allows their children to grow up as more productive adults. First, the efficient allocation is characterized. Next, this is compared with the outcome that arises when financial markets are incomplete. The situation where child-care markets are also lacking is then examined. Additionally, the consequences of impure altruism are analyzed.

Keywords: Investment in children; efficiency; imperfect financial markets; impure altruism; lack of child-care markets.

JEL Classifications: D1, D31, D58, I2

Erratum: Eq. 34 – Put a θ in front of the V.

Joao Gomes, Jeremy Greenwood, and Sergio Rebelo (August 2001), "Equilibrium Unemployment," Journal of Monetary Economics, v. 48, n. 1: 109-152.

A search-theoretic model of equilibrium unemployment is constructed and shown to be consistent with the key regularities of the labor market and business cycle. The two distinguishing features of the model are: (i) the decision to accept or reject jobs is modeled explicitly, and (ii) markets are incomplete. The model is well suited to address a number of interesting policy questions. Two such applications are provided: the impact of unemployment insurance, and the welfare costs of business cycles.

Keywords: Search; Incomplete Markets; Business Cycles; Unemployment Insurance; Welfare Costs of Business Cycles.

JEL Classifications: E24, E32

Jeremy Greenwood and Boyan Jovanovic (2001), "Accounting for Growth," in New Developments in Productivity Analysis, edited by Charles R. Hulten, Edwin R. Dean and Michael J. Harper. Chicago: University of Chicago Press (for NBER), 179-222.

A satisfactory account of the postwar growth experience of the United States should be able to come to terms with the following three facts:

Since the early 1970's there has been a slump in the advance of productivity.
The price of new equipment has fallen steadily over the postwar period.
Since the mid-1970's the skill premium has risen.

Variants of Solow's (1960) vintage-capital model can go a long way toward explaining these facts, as this paper shows. In brief, the explanations are:

Productivity slowed down because the implementation of information technologies was both costly and slow.
Technological advance in the capital goods sector has lead to a decline in equipment prices.
The skill premium rose because the new, more efficient capital is complementary with skilled labor and/or because the use of skilled labor facilitates the adoption of new technologies.

Keywords: Investment-specific technological progress, vintage-capital models, learning by doing, diffusion lags.

JEL Classifications: O3, O4

Jeremy Greenwood, Nezih Guner and John Knowles (May 2000), "Woman on Welfare: A Macroeconomic Analysis," American Economic Review (Papers and Proceedings), v. 92, n. 2: 383-388.

Jeremy Greenwood, Zvi Hercowitz and Per Krusell (January 2000), "The Role of Investment-Specific Technological Change in the Business Cycle," European Economic Review, v. 44, n. 1: 91-115.

This is a quantitative investigation of the importance of technological change specific to new investment goods for postwar U.S. aggregate fluctuations. A growth model that incorporates this form of technological change is calibrated to U.S. data and simulated, using the relative price of new equipment to identify the process driving investment-specific technology shocks. The analysis suggests that this form of technological change is the source of about 30 percent of output fluctuations.

Keywords: Investment-Specific Technological Change; Business Cycles

JEL Classification: E3, O3, O4

S. Rao Aiyagari, Jeremy Greenwood and Nezih Guner (April 2000), "On the State of the Union," Journal of Political Economy, v. 108, n. 2: 213-244.

An overlapping generations model of marriage and divorce is constructed to analyze family structure and intergenerational mobility. Agents differ by sex, marital status, and human capital. Single agents meet in a marriage market and decide whether to accept or reject proposals to wed. Married couples must decide whether to separate or not. Parents invest in their children depending on their wherewithal. A simulated version of the theoretical prototype can generate an equilibrium with a significant number of female-headed families and a high degree of persistence in income across generations. To illustrate the model's mechanics, the effects of two anti-poverty policies, namely child support and welfare, are investigated.

Historical Discussion

Keywords: Intergenerational Mobility; Marriage and Divorce; Children; Public Policy

Jeremy Greenwood and Boyan Jovanovic (May 1999), "The IT Revolution and the Stock Market," American Economic Review (Papers and Proceedings) v. 89, n. 2: 116-122.

Discussion in Business Week.

Discussion in The Wall Street Journal.

Michael Gort, Jeremy Greenwood, and Peter Rupert (January 1999), "Measuring the Rate of Technological Progress in Structures," Review of Economic Dynamics v. 2, n. 1: 207-230.

How much technological progress has there been in structures? An attempt is made to measure this using panel data on the age and rents for buildings. This data is interpreted through the eyes of a vintage capital model where buildings are replaced at some chosen periodicity. There appears to have been significant technological advance in structures that accounts for a major part of economic growth.

Keywords: Investment-specific technological progress; economic growth; vintage capital; replacement problem; economic depreciation; rent gradient.

Michael Gort, Jeremy Greenwood, and Peter Rupert (1999), "How Much of Economic Growth is Fueled by Investment-Specific Technological Progress?" Economic Commentary.

Discovering how economies grow is vitally important for economists and policymakers alike. This Commentary shows that more than half of U.S. economic growth can be attributed to technological advance in equipment and structures.

Thomas F. Cooley, Jeremy Greenwood, and Mehmet Yorukoglu (1997), "The Replacement Problem," Journal of Monetary Economics.

A prototypical vintage capital model of economic growth is developed, where the decision to replace old technologies with new ones is modeled explicitly. Technological change is investment specific. Depreciation in this environment is an economic, not a physical, concept. The vintage capital economy's balanced-growth paths and transitional dynamics are analyzed. The transitional dynamics are markedly different from the standard neoclassical growth model.

Keywords: Investment-Specific Technological Change; Vintage Capital; Economic Growth

Jeremy Greenwood (1997), The Third Industrial Revolution: Technology, Productivity and Income Inequality, AEI Studies on Understanding Inequality, Washington, DC. The AEI Press. Also printed in the Economic Review, 1999, Federal Reserve Bank of Cleveland.

Was 1974 a watershed? It was dawning of the information age, a period of rapid technological advance associated with the introduction of information technologies. It also was the start of a sharp rise in income inequality and signaled the beginning of the productivity slowdown. Were these phenomena related? Could they have been the result of an Industrial Revolution associated with the introduction of information technologies? The answer offered here is yes, and a simple theory connecting the phenomena is outlined. Evidence is presented showing that the coincidence of rapid technological change, widening inequality, and slowdowns in productivity growth are not with out precedence in economic history. Just as the steam engine shook 18th century England, and electricity rattled 19th century America, it is argued that information technologies are rocking the 20th century economy. (This paper is a nontechnical version of "1974".)

Jeremy Greenwood, Zvi Hercowitz, and Per Krusell (June 1997), "Long-Run Implications of Investment-Specific Technological Change," American Economic Review v. 87, n. 3: 342-362.

The role that investment-specific technological change played in generating postwar U.S. growth is investigated here. The premise is that the introduction of new, more efficient capital goods is an important source of productivity change, and an attempt is made to disentangle its effects from the more traditional Hicks-neutral form of technological progress. The balanced-growth path for the model is characterized and calibrated to U.S. National Income and Product Account data. The quantitative analysis suggests that investment-specific technological change accounts for the major part of growth.

Jeremy Greenwood and Bruce D. Smith (1997), "Financial Markets in Development, and the Development of Financial Markets," Journal of Economic Dynamics and Control.

What is the relationship between markets and development? It is argued that markets promote growth, and that growth in turn encourages the formation of markets. Two models with endogenous market formation are presented to analyze this issue. The first examines the role that financial markets - banks and stockmarkets - play in allocating funds to the highest valued use in the economic system. It is shown that intermediation will arise under weak conditions. The second focuses on the role that markets play in supporting specialization in economic activity. The consequences of perfect competition in market formation are highlighted.

Jeremy Greenwood and Mehmet Yorukoglu (June 1997), "1974," Carnegie-Rochester Conference Series on Public Policy v. 46: 49-95.

Was 1974 a watershed? It saw an increase in the rate of technological change in the production of new equipment. It was the start of a sharp rise in income inequality. It signaled the beginning of the productivity slowdown. Were these phenomena related? Could they have been the result of an Industrial Revolution associated with the introduction of information technologies?

Discussion in Newsweek

Jeremy Greenwood, Glenn M. MacDonald, and Guang-Jia Zhang (1996), "The Cyclical Behavior of Job Creation and Job Destruction: A Sectoral Model," Economic Theory.

Three key features of the employment process in the U.S. economy are that job creation is procyclical, job destruction is countercyclical, and job creation is less volatile than job destruction. These features are also found at the sectoral (goods and services) level. The paper develops, calibrates and simulates a two-sector general equilibrium model that includes both aggregate and sectoral shocks. The behavior of the model economy mimics the job creation and destruction facts. A non-negligible amount of unemployment arises due to the presence of aggregate and sectoral shocks.

Jeremy Greenwood, Richard Rogerson, and Randall Wright (1995), "Household Production in Real Business Cycle Theory," Frontiers of Business Cycle Research (Editor, Thomas F. Cooley) Princeton University Press: 157-174.

This paper surveys the role of household production in modern business cycle analysis.

Abridged version of the Paper

Jeremy Greenwood and Gregory W. Huffman (1995), "On the Existence of Nonoptimal Equilibria," Journal of Economic Theory.

The question of the existence of a stationary equilibrium for distorted versions of the standard neoclassical growth model is addressed in this paper. The conditions presented guaranteeing the existence of nontrivial equilibrium for the class of economies under study are simple and intuitively appealing, while the existence proof developed is elementary. Examples are given illustrating that economies with distortional taxation, endogenous growth with externalities, and monopolistic competition can all fit into the framework developed.

Paul Gomme and Jeremy Greenwood (1995), "On the Cyclical Allocation of Risk," Journal of Economic Dynamics and Control.

A real business cycle model with two types of agents, workers and entrepreneurs, is simulated to see if it can account for some stylized facts characterizing postwar U.S. business cycle fluctuations, such as the countercyclical movement of labor's share of income, and the acyclical behavior of real wages. It can. There exists an economy- wide market for contingent claims. On this market workers purchase insurance from entrepreneurs, through optimal labor contracts, against losses in income due to business cycle fluctuations. Insurance flows protecting workers against aggregate cyclical risk are calculated to be less than one percent of labor income.

Jeremy Greenwood and R. Preston McAfee (1991), "Externalities and Asymmetric Information," Quarterly Journal of Economics.

Jeremy Greenwood and Zvi Hercowitz (1991), "The Allocation of Capital and Time Over the Business Cycle," Journal of Political Economy.

Jeremy Greenwood and Gregory W. Huffman (April 1991), "Tax Analysis in a Real Business Cycle Model: On Measuring Harberger Triangles and Okun Gaps," Journal of Monetary Economics, v. 27, n. 2: 167-190.

Jeremy Greenwood and Boyan Jovanovic (October 1990), "Financial Development, Growth, and the Distribution of Income," Journal of Political Economy, v. 98, n. 5: 1076-1107.

Jeremy Greenwood and Stephen D. Williamson (May 1989), "International Financial Intermediation and Aggregate Fluctuations under Alternative Exchange Rate Regimes," Journal of Monetary Economics, v. 23, n. 3: 401-431.

Jeremy Greenwood, Zvi Hercowitz and Gregory W. Huffman (June 1988), "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, v. 78, n. 3: 402-417.

Fortran Computer Code

Jeremy Greenwood and Gregory W. Huffman (March 1987), "A Dynamic Equilibrium Model of Inflation and Unemployment," Journal of Monetary Economics. v. 19, n. 2: 203-228.

Jeremy Greenwood and Kent P. Kimbrough (June 1987), "Foreign Exchange Controls in a Black Market Economy," Journal of Development Economics. v. 26, n. 1: 129-143.

Jeremy Greenwood (November 1983), "Expectations, the Exchange Rate, and the Current Account", Journal of Monetary Economics, v. 12, n. 4: 543-569.