Valerie A. Ramey

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Effects of Government Spending

Time Use

Economic Fluctuations

The U.S. Auto Industry

The Effects of Oil Shocks

Search and Matching

 

Inventories

Capital Reallocation and Depreciation

Money and Credit

Wage Inequality and Trade

Miscellaneous


Effects of Government Spending


Government Spending Multipliers in Good Times and in Bad: Evidence from U.S. Historical Data with Sarah Zubairy, Revised June 20, 2014.

Ramey-Zubairy follow-up from EFG discussion with Yuriy Gorodnichenko

Slides from Yuriy Gorodnichenko's discussion at the EFG

Are Government Spending Multipliers Greater During Periods of Slack? Evidence from 20th Century Historical Data with Michael Owyang and Sarah Zubairy, January 2013. (Prepared for the AEA Papers and Proceedings)

This paper uses newly constructed quarterly data back to 1890 to analyze whether multipliers are greater when the unemployment rate is higher. We find no evidence of higher multipliers during periods of slack in the U.S. but we do find some evidence in Canada.

Government Spending and Private Activity, revised January 2012. (Prepared for the NBER "Fiscal Policy After the Financial Crisis")

This paper shows that increases in government spending (1) lower private spending; (2) lower unemployment; and (3) raise government employment but not private employment.

Can Government Purchases Stimulate the Economy?, Journal of Economic Literature, September 2011. Working paper version

This paper discusses what the literature tells us about the size of the government spending multiplier.

Identifying Government Spending Shocks: It's All in the Timing , Quarterly Journal of Economics February 2011.

This paper argues that anticipations are all-important in assessing the effects of government spending. It also creates a new series consisting of news about future increases in government spending driven by military events.

Background Narrative
Data and programs

Industry Evidence on the Effects of Government Spending with Christopher J. Nekarda, American Economic Journal - Macroeconomics , January 2011.

This paper uses detailed panel data on manufacturing industries to show that increases in government demand raise output and hours, lower real product wages and productivity, and leave markups unchanged.

Costly Capital Reallocation and the Effects of Government Spending with Matthew D. Shapiro, Carnegie-Rochester Conference Series on Public Policy, June 1998.

This paper makes two main points. First, it argues that increases in government spending during military buildups are very concentrated on a few industries. It then formulates a two sector model with costly capital mobility showing how the implications of an increase in government spending can change in this richer model. Second, it develops a new series of "war dates" and uses them to establish stylized facts on the effects of government spending on output, consumption, investment, real wages and interest rates.



Time Use

Summary of my time use research in the NBER Reporter

Is there a "Tiger Mother" Effect? Time Use Across Ethnic Groups   revised March 2011.

This paper describes some preliminary research on a long-term project on differences in education-related time use across ethnic groups.

The Rug Rat Race with Garey Ramey, Brookings Papers on Economic Activity Spring 2010. Data and Programs

This paper documents the dramatic increase in time spent with children, particularly among college-educated parents, since the early 1990s. It tests a variety of hypotheses and presents a new hypothesis linked to the increased competition to get into college in the U.S.. Comparisons across the U.S. and Canada, where childcare time has not increased much, are consistent with the hypothesis.

Measures of Per Capita Hours and Their Implications for the Technology-Hours Debate with Neville Francis, Journal of Money, Credit, and Banking, Sept. 2009.Working Paper version

This paper argues that the low frequency movements in hours worked per capita are due to sectoral shifts and demographics. It constructs a new series on total hours worked in the economy as well as versions weighted for demographics. It then shows that when the new series are used in SVARS to identify technology shocks, a positive technology shock leads to a decrease in hours worked.

Data for paper.
Quarterly total hours through 2013

A Century of Work and Leisure with Neville Francis, American Economic Journal - Macroeconomics , July 2009.   Winner of the "Best Paper Prize" Data  Updates of a few series through 2012

This paper develops new data on time use by demographic group from 1900 to the present. It finds that while leisure time has increased significantly for the elderly, somewhat for the young, it has not changed much for prime-age individuals.

Time Spent in Home Production in the 20th Century United States, The Journal of Economic History , March 2009. Data Updates of a few series through 2012

This paper develops new series on time spent in home production by major groups since 1900. The resulting series are very different from some of the estimates that have formed the basis of recent macroeconomic papers. It also explores the theoretical and empirical implications of declining relative prices of home appliances.

How Much has Leisure Really Increased Since 1965? January 2007

This paper demonstrates that some of the recent findings of a significant increase in leisure time since 1965 can be traced to subtle variations in the classification of activities across time diary studies.



Economic Fluctuations

The Impact of Hours Measures on the Trend and Cycle Behavior of Labor Productivity , revised July 2012

The Cyclical Behavior of the Price-Cost Markup with Christopher J. Nekarda, revised May 2013

This paper compiles new data to investigate the cyclicality of markups. It finds that markups are either procyclical or acyclical, even in response to demand shocks.

Measures of Per Capita Hours and Their Implications for the Technology-Hours Debate with Neville Francis, Journal of Money, Credit, and Banking, Sept. 2009.Working Paper version

This paper argues that the low frequency movements in hours worked per capita are due to sectoral shifts and demographics. It constructs a new series on total hours worked in the economy as well as versions weighted for demographics. It then shows that when the new series are used in SVARS to identify technology shocks, a positive technology shock leads to a decrease in hours worked.

Data
  Updated total hours data

Is the Technology-Driven Real Business Cycle Hypothesis Dead? Shocks and Aggregate Fluctuations Revisited with Neville Francis, Journal of Monetary Economics Nov. 2005.Working Paper version

This paper develops new over-identifying restrictions to test whether Gali's method of identifying technology shocks makes sense. The findings support his interpretation and results. It then offers two new models that do not involve sticky prices that can explain the results.

Tracking the Source of the Decline in GDP Volatility: An Analysis of the Automobile Industry with Daniel J. Vine, Revised March 11, 2004
A shorter version of this paper appeared in the December 2006 American Economic Review.

This paper starts by noting that all of the stylized facts about the Great Moderation also characterize the automobile industry. It then estimates a model of production scheduling in the automobile industry to understand the source of the changes from the viewpoint of that industry in order to shed light on the larger question. It finds that changes in the persistence of industry demand shocks explain the group of seemingly disparate facts. This change in persistence is consistent with a change in how monetary policy is conducted.

The Source of Historical Fluctuations with Neville Francis, NBER International Seminar on Macroeconomics 2004.

This paper uses long-run restrictions to decompose shocks into technology and non-technology shocks back to 1889. The paper finds that while positive technology shocks raised hours in the pre-WWII period, it lowered hours in the post-WWII period. The findings also support Fields' contention that the second half of the 1930s was a period of great innovation.

Cross Country Evidence on the Link between Volatility and Growth with Garey Ramey, American Economic Review, Dec. 1995. Data

This paper argues that growth and business cycles are not necessarily independent phenomenon. Using panel data and instruments, it finds that higher conditional volatility is associated with lower growth.

Technology Commitment and the Cost of Business Cycles with Garey Ramey June 1991

(Note: This is the paper we originally submitted to the AER. The first half presents a theory showing how technology commitment and endogenous growth imply a high cost of business cycles. The second half analyzes the relationship between growth and volatility in U.S. time series data. The requested revision, which asked us to eliminate the theory and present cross-country evidence, is the paper published in 1995 under the title "Cross-Country Evidence on the Link between Volatility and Growth.")

Ramey & Ramey Response to Chatterjee-Shukayev "Are Average Growth Rate and Volatility Related?" September 2006

Output Fluctuations at the Plant Level with Timothy F. Bresnahan, Quarterly Journal of Economics, Aug. 1994.


The U.S. Auto Industry

Oil, Automobiles and the U.S. Economy: How Much Have Things Really Changed? with Daniel J. Vine, NBER Macroeconomics Annual 2010.    Write up in the NBER Digest     Data

This paper questions the previous finding that oil shocks have less effect on the U.S. economy now. Previous studies, including those using Hamilton's measure, have found that a given size shock to oil or gas prices has less effect on GDP now than in the 1970s. The paper argues that these studies omit the important extra cost imposed by the price controls and shortages of the 1970s. The paper creates two new measures of oil price shocks that include these costs and finds stability in the response of the U.S. economy to oil shocks when measured properly. The paper also conducts a detailed analysis of the impact on of oil shocks on the auto industry and finds little change in the response from the 1970s to the present.

Declining Volatility in the U.S. Automobile Industry with Daniel J. Vine, American Economic Review , December 2006. Data

Tracking the Source of the Decline in GDP Volatility: An Analysis of the Automobile Industry with Daniel J. Vine, Revised March 11, 2004
A shorter version of this paper appeared in the December 2006 American Economic Review.

Output Fluctuations at the Plant Level with Timothy F. Bresnahan, Quarterly Journal of Economics, Aug. 1994, pp. 593-624.

Segment Shifts and Capacity Utilization in the U.S. Automobile Industry with Timothy F. Bresnahan, American Economic Review Papers and Proceedings, May 1993.

This paper explores the effects of the big oil shocks during the 1970s on the U.S. automobile industry.


The Effects of Oil Shocks

Oil, Automobiles and the U.S. Economy: How Much Have Things Really Changed? with Daniel J. Vine, NBER Macroeconomics Annual 2010.     Write-up in the NBER Digest     Data

This paper questions the previous finding that oil shocks have less effect on the U.S. economy now. Previous studies, including those using Hamilton's measure, have found that a given size shock to oil or gas prices has less effect on GDP now than in the 1970s. The paper argues that these studies omit the important extra cost imposed by the price controls and shortages of the 1970s. The paper creates two new measures of oil price shocks that include these costs and finds stability in the response of the U.S. economy to oil shocks when measured properly. The paper also conducts a detailed analysis of the impact on of oil shocks on the auto industry and finds little change in the response from the 1970s to the present.

Segment Shifts and Capacity Utilization in the U.S. Automobile Industry with Timothy F. Bresnahan, American Economic Review Papers and Proceedings, May 1993.

This paper explores the effects of the big oil shocks during the 1970s on the U.S. automobile industry.


Inventories

Declining Volatility in the U.S. Automobile Industry with Daniel J. Vine, American Economic Review , December 2006. Data

This paper starts by noting that all of the stylized facts about the Great Moderation also characterize the automobile industry. It then conducts a case study of the automobile industry to understand the source of the changes from the viewpoint of that industry in order to shed light on the larger question. It finds that changes in the persistence of industry demand shocks alone explain the group of seemingly disparate facts.

Why Do Real and Nominal Inventory-Sales Ratios Have Different Trends? with Daniel J. Vine, Journal of Money, Credit, and Banking Oct. 2004. Working Paper version

Inventories with Kenneth D. West, Handbook of Macroeconomics, 1999.Working Paper version

Segment Shifts and Capacity Utilization in the U.S. Automobile Industry with Timothy F. Bresnahan, American Economic Review Papers and Proceedings, May 1993.

This paper explores the effects of the big oil shocks during the 1970s on the U.S. automobile industry.

Nonconvex Costs and the Behavior of Inventories, Journal of Political Economy, Apr. 1991.

Inventories as Factors of Production and Economic Fluctuations, American Economic Review, June 1989.


Capital Reallocation and Depreciation

Why Do Computers Depreciate? with Michael Geske and Matthew D. Shapiro Hard to Measure Goods and Services: Essays in Honor of Zvi Griliches , University of Chicago Press, 2007.

Displaced Capital: A Study of Aerospace Plant Closings with Matthew D. Shapiro, Journal of Political Economy, Oct. 2001.

This paper uses newly collected data to estimate the loss in value of capital when a plant shuts down in the midst of an industry downsizing. The loss is value of capital is much greater than the loss in lifetime earnings of the displaced workers.

Costly Capital Reallocation and the Effects of Government Spending with Matthew D. Shapiro, Carnegie-Rochester Conference Series on Public Policy, June 1998.

This paper makes two main points. First, it argues that increases in government spending during military buildups are very concentrated on a few industries. It then formulates a two sector model with costly capital mobility showing how the implications of an increase in government spending can change in this richer model. Second, it develops a new series of "war dates" and uses them to establish stylized facts on the effects of government spending on output, consumption, investment, real wages and interest rates.

Capital Churning with Matthew D. Shapiro, July 1998

Money and Credit

The Cost Channel of Monetary Transmission with Marvin J. Barth, NBER Macroeconomics Annual 2001. Errata

This paper explores the hypothesis that monetary policy shocks affect the economy through a cost side as well as a demand side. It finds evidence in favor of such a "cost channel."

How Important is the Credit Channel in the Transmission of Monetary Policy?, Carnegie-Rochester Conference Series on Public Policy, Dec. 1993.

This paper studies whether credit flows provide information over and above monetary aggregates. For the most part, the answer is "no." The only exceptions are the credit variables by firm size used by Gertler and Gilchrist.

The Source of Fluctuations in Money: Evidence from Trade Credit , Journal of Monetary Economics, Nov. 1992.

This paper tests the King-Plosser hypothesis that most movements in money are endogenous responses to an economy hit by technology shocks. The paper constructs a model that shows that the movements of trade credit across firms can be used to identify whether the movements in money are due to demand or supply. It finds evidence that most movements are due to money supply shocks, suggesting that monetary policy is driving movements in money.


Wage Inequality and Trade

Foreign Competition, Market Power and Wage Inequality with George J. Borjas, Quarterly Journal of Economics, 110, Nov. 1995, pp. 1075-1110.

This paper argues that part of the increase in wage inequality starting in the late 1970s can be linked to increased international competition with U.S. firms that historically had significant market power. It presents a model in which firms earn rents and share them with their workers. When competition increases, less skilled workers are hurt. It presents evidence across a panel of cities supporting the implications of the theory.

"The Relationship between Wage Inequality and Trade" with George J. Borjas in The Changing Distribution of Income in an Open U.S. Economy eds. J.H. Bergstrand, T.F. Cosimano, J.W. Houck and R.G. Sheehan, 1994.

Time Series Evidence on the Sources of Trends in Wage Inequality with George J. Borjas, American Economic Review Papers and Proceedings, May 1994.

Market Responses to Interindustry Wage Differentials with George J. Borjas, July 2000


Miscellaneous

Liquidity Constraints and Intertemporal Consumer Optimization: Theory and Evidence from Durable Goods with Eun Young Chah and Ross M. Starr, Journal of Money, Credit, and Banking, Feb. 1995.

The Effects of Market Organization on Conspiracies in Restraint of Trade, with R. Mark Isaac and Arlington Williams, Journal of Economic Behavior and Organization, June 1984.

Review of The Big Ditch: How American Took, Built, Ran and Ultimately Gave Away the Panama Canal


Search and Matching

A Brief History of the Search and Matching Literature  (updated February 22, 2011)

Data

This material is based upon work supported by the National Science Foundation under grant numbers 0617219, 0213089, SBR-9617437, and SES 90-22947. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.

Defense News Series: 1890q1 - 2013q4     Updated April 2014

Defense News Narrative     Updated April 2014

Data for "Identifying Government Spending Shocks"
        Summary Data, U.S., 1939-2008
        Stata program for VARs using Ramey-Shapiro dates
        Stata program for VARs using news series 1939-2008
        Stata program for VARs using Survey of Professional Forecaster Shocks
        CSV file used by the VAR programs (Updated 1/10/2013 to renormalize the GDP deflator so that it is equal to the ratio of nominal to real GDP.)

Ramey and Vine: Two New Monthly Measures of Oil Shocks that Account for Non-Price Rationing (now extended from 1959m1-2012m1)

Francis-Ramey Updates: Quarterly Data on Total Hours and Employment: 1947q1 - 2013q4     Updated April 2014

"Time Spent in Home Production" and "Century of Work and Leisure" update through 2012 of hours spent in home production and market work for prime age groups     Updated April 2014

Annual Data on Work, Home Production, Schooling and Leisure by Demographic Group, 1900-2005

Annual Data on Home Production by Key Group, 1900 - 2000

Data on Cross-Country Volatility and Growth

Bresnahan-Ramey-Vine Automotive Assembly Plant Data