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1. The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy

Author:
Lorenzo Caliendo, Fernando Parro, Esteban Rossi-Hansberg, and Pierre-Daniel Sarte
Publication Date:
10-2014
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we obtain the aggregate, regional and sectoral elasticities of measured TFP, GDP, and employment to regional and sectoral productivity changes. We find that such elasticities can vary significantly depending on the sectors and regions affected and are importantly determined by the spatial structure of the US economy. We highlight the role of these elasticities by tracing out the effects of productivity gains in California in the Computers and Electronics industry between 2002 and 2007 on all other U.S. sectors and regions.
Topic:
Economics, Science and Technology, GDP, Regionalism, and Productivity
Political Geography:
North America and United States of America

2. Home Computers and Educational Outcomes: Evidence from the NLSY97 and CPS

Author:
Daniel O. Beltran, Kuntal K Das, and Robert W. Fairlie
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Although computers are universal in the classroom, nearly twenty million children in the United States do not have computers in their homes. Surprisingly, only a few previous studies explore the role of home computers in the educational process. Home computers might be very useful for completing school assignments, but they might also represent a distraction for teenagers. We use several identification strategies and panel data from the two main U.S. datasets that include recent information on computer ownership among children -- the 2000-2003 CPS Computer and Internet Use Supplements (CIUS) matched to the CPS Basic Monthly Files and the National Longitudinal Survey of Youth 1997 -- to explore the causal relationship between computer ownership and high school graduation and other educational outcomes. Teenagers who have access to home computers are 6 to 8 percentage points more likely to graduate from high school than teenagers who do not have home computers after controlling for individual, parental, and family characteristics. We generally find evidence of positive relationships between home computers and educational outcomes using several identification strategies, including controlling for typically unobservable home environment and extracurricular activities in the NLSY97, fixed effects models, instrumental variables, and including future computer ownership and falsification tests. Home computers may increase high school graduation by reducing non-productive activities, such as truancy and crime, among children in addition to making it easier to complete school assignments.
Topic:
Crime, Education, and Science and Technology
Political Geography:
Global Focus

3. Order Flow and Exchange Rate Dynamics in Electronic Brokerage System Data

Author:
Jonathan H. Wright, David W. Berger, Alain P. Chaboud, Sergey V. Chernenko, Edward Howorka, Raj S. Iyer, and David Liu
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We study the association between order flow and exchange rate returns in five years of high-frequency intraday data from the leading interdealer electronic broking system, EBS. While the association between order flow and exchange rate returns has been studied in several previous papers, these have mostly used relatively short spans of daily data from older bilateral dealing systems and, usually, transaction counts instead of actual trading volume. Using a substantially longer span of recent high-frequency data and measuring order flow as actual signed trading volume, we find a strong positive association between order flow and exchange rate returns at frequencies ranging from one minute to one day, and a more modest but still sizeable association at the monthly frequency. We find, however, no evidence that order flow has predictive power for future exchange rate movements beyond, possibly, the next minute. Focusing on the behavior of order flow and exchange rates at the time of scheduled U.S. economic data releases, we find that the surprise components of these announcements are associated with order flow at high frequency immediately after the data releases. This finding seems inconsistent with a simple efficient markets view of how a public news announcement is incorporated into prices.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
United States

4. A Flexible Finite-Horizon Identification of Technology Shocks

Author:
Neville Francis, Michael T. Owyang, and Jennifer T. Roush
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Recent empirical studies using infinite horizon long-run restrictions question the validity of the technology-driven real business cycle hypothesis. These results have met with their own controversy, stemming from their sensitivity to changes in model specification and the general poor performance of long run restrictions in Monte Carlo experiments. We propose a alternative identification that maximizes the contribution of technology shocks to the forecast error variance of labor productivity at a long, but finite horizon. In small samples, our identification outperforms its infinite horizon counterpart by producing less biased impulse responses and technology shocks that are more highly correlated with the technology shocks from the underlying model. For U.S. data, we show that the negative hours response is not robust to allowing a greater role for non-technology shocks in the forecast error variance share at a ten year horizon.
Topic:
Development, Industrial Policy, International Trade and Finance, and Science and Technology
Political Geography:
United States

5. International Risk-Sharing and the Transmission of Productivity Shocks

Author:
Sylvain Leduc, Giancarlo Corsetti, and Luca Dedola
Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
A central puzzle in international finance is that real exchange rates are volatile and, in stark contradiction to efficient risk-sharing, negatively correlated with cross-country consumption ratios. This paper shows that a standard international business cycle model with incomplete asset markets augmented with distribution services can account quantitatively for these properties of real exchange rates. Distribution services, intensive in local inputs, drive a wedge between producer and consumer prices, thus lowering the impact of terms-of-trade changes on optimal agents' decisions. This reduces the price elasticity of tradables separately from assumptions on preferences.
Topic:
Development, Economics, International Trade and Finance, and Science and Technology
Political Geography:
United States

6. Can Long-Run Restrictions Identify Technology Shocks?

Author:
Luca Guerrieri, Christopher Gust, and Christopher J. Erceg
Publication Date:
10-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Gali's innovative approach of imposing long-run restrictions on a vector autoregression (VAR) to identify the effects of a technology shock has become widely utilized. In this paper, we investigate its reliability through Monte Carlo simulations using calibrated business cycle models. We find it encouraging that the impulse responses derived from applying the Gali methodology to the artificial data generally have the same sign and qualitative pattern as the true responses. However, we find considerable estimation uncertainty about the quantitative impact of a technology shock on macroeconomic variables, and little precision in estimating the contribution of technology shocks to business cycle fluctuations. More generally, our analysis emphasizes that the conditions under which the methodology performs well appear considerably more restrictive than implied by the key identifying assumption, and depend on model structure, the nature of the underlying shocks, and variable selection in the VAR. This cautions against interpreting responses derived from this approach as model-independent stylized.
Topic:
Conflict Resolution, Economics, International Trade and Finance, and Science and Technology

7. Report of the Defense Science Board Task Force on Integrated Fire Support in the Battlespace

Publication Date:
10-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In 2001, the Under Secretary of Defense for Acquisition, Technology and Logistics (USD(AT)) directed the Defense Science Board (DSB) to study the precision targeting of air-delivered munitions. The results of the 2001 Task Force were well-received within Office of the Secretary of Defense (OSD), and in June 2003, USD(AT) directed the DSB to study the closely related topic of “integrated fire support in the battlespace.” In this new study the 2003 Task Force applied an approach and methodology similar to the 2001 effort but focused instead on ground-based fires, sea-based fires, and close-air support.
Topic:
Defense Policy and Science and Technology
Political Geography:
United States

8. Defense Industrial Base Capabilities Study: Force Application

Publication Date:
10-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In February 2003, the Office of the Deputy Under Secretary of Defense for Industrial Policy, ODUSD(IP), produced Transforming the Defense Industrial Base: A Roadmap. This report identified the need for systematic evaluation of the ability of the defense industrial base to develop and provide functional, operational effects-based warfighting capabilities. The Defense Industrial Base Capabilities Study (DIBCS) series is a systematic assessment of critical technologies needed in the 21st century defense industrial base to meet warfighter capabilities, as framed by the Joint Staff's functional concepts. In addition, the DIBCS series provides the basis for strengthening the industrial base required for 21st century warfighting needs. This report addresses the third of those functional concepts, Force Application.
Topic:
Defense Policy, Industrial Policy, and Science and Technology
Political Geography:
United States

9. Defense Science Board Report on Corrosion Control

Publication Date:
10-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Weapons system readiness and safety are among the highest priority challenges for the Department of Defense (DoD). As it continues to receive a large number of mission taskings, it is imperative that DoD equipment be maintained at an acceptable level of material condition so that it may be employed safely and effectively when required, often in harsh and physically demanding environments. However, both the material condition and safety of DoD equipment are routinely being undermined by the effects of corrosion. The dollar cost of corrosion to DoD has been estimated by the Government Accountability Office (GAO) to be $10-20 billion per year. Aggressive action is needed at every stage in the life cycle of this equipment — during design, materials selection, construction, operation, and maintenance — to reduce the negative effects of corrosion.
Topic:
Defense Policy, Arms Control and Proliferation, and Science and Technology
Political Geography:
United States

10. Defense Science Board 2003 Summer Study on DoD Roles and Missions in Homeland Security, Volume B

Publication Date:
09-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
During the Cold War, the United States developed and refined intelligence capabilities upon a number of key factors: Known adversaries, the Soviet Union and the Communist Bloc, including China and North Korea; Known geographic boundaries: that of the communist nation states (We knew where to look); Known conflict of ideology: communism vs. capitalism; Observable (with some degree of confidence over time) military capabilities of adversaries; and Indications (and in some cases, warning - developed over the years) of activity potentially hazardous to the United States and NATO.
Topic:
Defense Policy, National Security, and Science and Technology
Political Geography:
United States, China, and North Korea

11. The Vertical Lift Industrial Base: Outlook 2004-2014

Publication Date:
07-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The vertical lift industrial base still is being shaped by government and industry responses to the Nunn-McCurdy cost breaches of 2001 and the unintended consequences of Department-endorsed teaming arrangements that resulted in an interlocked industrial base that restricted Department and industry flexibility. The Department's budget-driven remanufacture strategy in the 1990s produced a series of sole-sourced relationships, leaving few real competitive opportunities among the helicopter prime contractors to force technology refresh cycles. With limited competition, few new platform contracts, and declining government technology investments, industry was left little incentive to invest in independent research.
Topic:
Defense Policy, Industrial Policy, and Science and Technology
Political Geography:
United States

12. Report of the Defense Science Board Task Force on Contributions of Space Based Radar to Missile Defense

Publication Date:
06-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In accordance with the National Defense Authorization Act for FY 2004, the Defense Science Board (DSB) was asked to assess the potential contributions of a Space Based Radar (SBR) to missile defense. In response, the Undersecretary of Defense for Acquisition, Technology and Logistics (USD (AT), and the Director, Missile Defense Agency (MDA) directed that the DSB Task Force on the Contribution of a Space Based Radar to Missile Defense perform the following tasks: Assess the impact of adding a missile defense mission on the ability of SBR satellites to conduct their primary missions; Assess how different SBR architectures and technical approaches might affect the ability of the satellites to achieve their primary missions and to contribute to missile defense; Assess the value of potential SBR capabilities in the context of the family of sensors being developed by the Missile Defense Agency; and Recommend any future actions that might be desirable related to SBR contributions to missile defense.
Topic:
Defense Policy, National Security, Science and Technology, and Weapons of Mass Destruction

13. Defense Industrial Base Capabilities Study: Command Control

Publication Date:
06-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In February 2003, the Office of the Deputy Under Secretary of Defense for Industrial Policy, ODUSD(IP), produced Transforming the Defense Industrial Base: A Roadmap. This report identified the need for systematic evaluation of the ability of the defense industrial base to develop and provide functional, operational effects-based warfighting capabilities. The Defense Industrial Base Capabilities Study (DIBCS) series is a systematic assessment of critical technologies needed in the 21st century defense industrial base to meet warfighter requirements as framed by the Joint Staff's functional concepts. In addition, the DIBCS series provides the basis for strengthening the industrial base that provides solutions to warfighting needs—and from which the Joint Staff develops its Joint Integrating Concepts and Joint Operating Concepts. This report addresses the second of those functional concepts, Joint Command and Control.
Topic:
Defense Policy, Industrial Policy, and Science and Technology
Political Geography:
United States

14. Defense Science Board 2003 Summer Study on DoD Roles and Missions in Homeland Security

Publication Date:
05-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In the wake of the events of September 11, 2001, the role of the Department of Defense in domestic emergency preparedness and response is under scrutiny. Ever since President Carter established the Federal Emergency Management Agency (FEMA) in 1978, the Defense Department has considered its domestic emergency response role to be one of providing support or assistance to civil authority. Military planners assume that civil agencies will always lead domestic emergency preparedness and response efforts, with the Department of Defense providing resources only in response to appeals from state and local governments to the President. Local and state governments are expected to use their resources first. While National Guard capabilities may be called into play by the Governor under Title 32 status, military commanders and planners have usually assumed that other Department of Defense assets will be called into play only when local, state, and other federal resources are overwhelmed. Concerns about the Posse Comitatus Act and misunderstandings of its scope have also tended to restrict the deployment of Department of Defense assets where their use might be construed as augmenting state and local law enforcement agencies.
Topic:
Defense Policy, National Security, and Science and Technology
Political Geography:
United States

15. Annual Industrial Capabilities Report to Congress, 2004

Publication Date:
03-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Section 2504 of title 10, United States Code, requires that the Secretary of Defense submit an annual report to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives, by March 1st of each year.
Topic:
Defense Policy, Industrial Policy, Science and Technology, and Terrorism
Political Geography:
United States

16. Study on Impact of Foreign Sourcing of Systems

Publication Date:
01-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Recent operations in Iraq raised concerns that foreign nations might restrict or preclude shipments of defense articles for DoD applications during internationally unpopular engagements. Given this possibility, the Department of Defense decided to review the extent to which it depends on foreign suppliers for operationally important defense systems.
Topic:
Defense Policy, Industrial Policy, and Science and Technology
Political Geography:
Iraq and Middle East

17. Report of the Defense Science Board Task Force on Missile Defense Phase III: Modeling and Simulation

Publication Date:
03-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This report covers Phase III of the work of the Defense Science Board (DSB) Task Force on Missile Defense. Phase I examined mid-course discrimination. Phase II, a 2002 DSB Summer Study, examined the four issues shown in the chart above. Following completion of the Phase II report, the Director, Missile Defense Agency (MDA) asked the Task Force to examine modeling and simulation (M). The Under Secretary Defense for Acquisition, Technology and Logistics (USD [AT]) concurred. The request was further refined to the five areas shown. After a brief introduction, this report will cover each of the five issues in turn.
Topic:
Defense Policy, Science and Technology, and Weapons of Mass Destruction

18. Report of the Defense Science Board Task Force on Unmanned Aerial Vehicles and Uninhabited Combat Aerial Vehicles

Publication Date:
02-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Lessons from recent combat experiences in Kosovo, Afghanistan and Iraq have shown that UAVs can provide vastly improved acquisition and more rapid dissemination of Intelligence, Surveillance and Reconnaissance (ISR) data. They are one of the principal contributors to successful outcomes for the United States. in these campaigns. The benefits and promise offered by UAVs in surveillance, targeting and attack have captured the attention of senior military and civilian officials in the Defense Department (DoD), members of Congress, and the public alike. Indeed, these recent combat operations appear to indicate that unmanned air systems have at last come of age.
Topic:
Defense Policy, Science and Technology, and Weapons of Mass Destruction
Political Geography:
Afghanistan, United States, Iraq, and Kosovo

19. Defense Industrial Base Capabilities Study: Battlespace Awareness

Publication Date:
01-2004
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In February 2003, the Office of the Deputy Under Secretary of Defense for Industrial Policy, ODUSD(IP), produced Transforming the Defense Industrial Base: A Roadmap. This report identified the need for systematic evaluation of the ability of the defense industrial base to develop and provide functional, operational effects-based warfighting capabilities. The Defense Industrial Base Capabilities Study (DIBCS) series begins a systematic assessment of critical technologies and industrial capabilities needed in the 21st century defense industrial base to meet warfighter requirements as framed by the Joint Staff's Functional Concepts and Joint Operational Architecture. The DIBCS series ties directly to warfighter needs by linking industrial base capabilities to warfighter capabilities derived from the Functional Concepts. This report addresses the first of those functional concepts, Battlespace Awareness.
Topic:
Defense Policy, Industrial Policy, and Science and Technology
Political Geography:
United States

20. The Response of Hours to a Technology Shock: Evidence Based on Direct Measures of Technology

Author:
Robert J. Vigfusson, Lawrence J. Christiano, and Martin Eichenbaum
Publication Date:
12-2003
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We investigate what happens to hours worked after a positive shock to technology, using the aggregate technology series computed in Basu, Fernald and Kimball (1999). We conclude that hours worked rise after such a shock.
Topic:
Economics, Industrial Policy, and Science and Technology
Political Geography:
United States