This award funds a conference in macroeconomics. The PI is bringing together a group of leading scholars to discuss research in progress. The conference includes both established and emerging scholars, and it provides an important opportunity for cross-fertilization between different areas of macroeconomics. Participants were chose from over 500 paper submissions. The meetings are also open to graduate students and policy-makers. Researchers will benefit from the opportunity to get early feedback on their research.
Broader impacts include promoting under-represented groups in economic science; the conference organizers are working together with mentoring programs sponsored by the American Economic Association to invite promising graduate students and junior scholars from under represented groups. Much of the research presented is relevant for macroeconomic policy decisions.
This grant supported a major research conference in July 2013 on current developments in macroeconomics along with a set of .eight meetings of working groups on more narrowly defined macroeconomic research issues. These meetings were held as part of the Summer Institute at the National Bureau of Economic Research, and they were attended by several hundred researchers. The research topics covered during the research conference ranged widely within the field of macroeconomics. Six papers were selected for presentation and discussion; there were more than 500 papers submitted for potential presentation at either the main research conference or in one of the smaller group meetings. At the research conference, there was a particular focus on understanding the factors that have contributed to the high unemployment rate in the United States since 2008. One study approached the decision to hire a new worker as an investment by the firm, with long-lived benefits and potentially front-loaded costs. This framework offers insights on why the rate of new hires may decline at the same time investment spending declines. Another study examined the role of recalls by a worker's prevoius employer as a source of re-employment. It documented not only that more than one in three workers who becomes unemployed returns to their previous employer, but also that the probability of returning to work at a previous employer varies less over the business cycle than the probability of being hired by a new employer. This research helps to inform the degree of labor market mismatch in the U.S. economy. Two other studies at the research conference examined the underlying determinants of long-term economic growth. One study focused on the relative rates of innovation of new firms and established firms. Younger firms tend to be more innovative; this raises an interesting set of questions about the potential role of government policy in affecting the age distribution of firms, and the welfare consequences of such changes. Another study presented new evidence on the role of international differences in educational attainment and "human capital" in explaining differences in growth rates. The study discovered that age-earnings profiles tend to be much flatter in developing than in developed countries, suggesting that the rate of human capital accumulation over the lifecycle is lower in the former than in the latter. This observation can be used to develop new estimates of the stock of human capital in different countries. This empirical measure of human capital can then be used as an explanatory variable for cross-country growth patterns. The research finds that when the age-earnings slope is recognized when constructing human capital measures, the explanatory power of these variables rises, thereby suggesting the importance of human capital differences in explaining cross-country growth patterns. The two remaining presentations at the reserach conference described new discoveries on the role of financial frictions in contributing to macroeconomic fluctuations, and on the design of central bank policy in the face of sovereign debt crises. Both studies contribute to the increasingly rich literature that sheds light on the sources and propogation of financial shocks, and the links between shocks in financial markets and the level of output and employment in the economy. The smaller research group meetings also spanned a wide range of topics, including the dynamics of pricing behavior by firms, the inter-regional transmission of economic shocks, new developments in macroeconomic forecasting, and the determinants of long-term economic growth. The meetings provided an important opportunity for early-stage researchers to share their latest findings with other scholars, and to learn about the latest developments in the field from established investigators.
