New indicators, based on technology titles, are used to measure the impact of innovative activity on the U.S. labor market between 1909 and 1949. We find that positive technology shocks raised productivity, employment, vacancies, and labor turnover and lowered unemployment and business failures. Moreover, automotive and electrical innovations (quintessential general-purpose technologies) had a greater positive impact on employment than those in mechanical innovations. The overall results, compatible with the predictions of the real business cycle model, raise questions about the anemic recovery in employment after 1934 since the strong upsurge in technical change failed to be accompanied by vigorous job expansion.

Bank capital ratios have increased steadily since the financial crisis. For a sample of 101 large banks from advanced and emerging economies, retained earnings account for the bulk of their higher risk-weighted capital ratios, with reductions in risk weights playing a lesser role. On average, banks continued to expand their lending in real terms, though lending contracted among European banks. Lower dividend payouts and (for advanced economy banks) wider lending spreads have contributed to banks’ ability to use retained earnings to build capital. Banks that came out of the crisis with higher capital ratios and stronger profitability were able to expand lending more.

We explore a new mechanism by which investors take correlated shortcuts and present evidence that managers—using sales management—take advantage of these shortcuts. Specifically, we exploit a regulatory provision wherein a firm's primary industry is determined by the highest sales segment. Exploiting this regulation, we provide evidence that investors classify operationally nearly identical firms as starkly different depending on their placement around this sales cutoff. Moreover, managers appear to exploit this by manipulating sales to be just over the cutoff in favorable industries. Further evidence suggests that managers engage in activities to realize large, tangible benefits from this opportunistic action.

Using firm data disaggregated by industry, the authors establish a set of regularities in the distribution of firm R&D intensities within manufacturing industries. The authors show how a simple probabilistic process, in which change influences a key unobserved determinant of R&D and firm size conditions the returns to R&D, can account for these regularities and other features of the distributions. The model provides a unified, noncausal explanation of a series of long-observed relationships across mean R&D intensity, market concentration, and the coefficient of variation. It also offers a novel explanation for the inverse relationship between R&D productivity and firm size. Copyright 1992 by American Economic Association.

In the past two decades, considerable progress has been made in studying the economic relationships between countries through the linkage of large-scale national econometric models. Examples of these projects include Project Link, the RDX2-MPS experiments of the Bank of Canada, and the multicountry model of the Federal Reserve Board. While these models tell us much, they typically suffer from several important problems. First, the linkages are often incomplete. In some cases the separate country models may only be linked via the trade accounts. Or, if capital and factor flows are considered, they are modeled in only a highly aggregated fashion. Second, as Ray Fair (1979) has noted, no model does an adequate job of linking the underlying sectoral flows of funds accounts with the national income accounts. Therefore, in the interest of modeling aggregate relationships, underlying balance sheet constraints may be violated or ignored. This could have, Fair argues, important consequences for empirical results.' In this paper we suggest our own strategy for modeling the economic linkages between any two countries. Our strategy focuses on the underlying flows between these two countries and the sectoral contributions to these flows. That is, we propose to merge the flow of funds accounts via their bilateral balance of payments. We envision an integrated flow of funds accounting framework with the two countries sharing a common balance of payments. This modeling strategy has several advantages. First, our suggested framework could be used, following the strategy of Fair, to supply the financial underpinning for future economic modeling of international linkages of prices and interest rates. The balance sheet constraints inherent in the framework will impart additional information in any statistical estimation of such a model. Second, this strategy should yield a better understanding of a country's balance of payments since it necessarily links domestic decision making with its international outcome. Third, our framework should be useful to policymakers since it would allow them to model the underlying financial implications of proposed policy changes. Finally, the implementation of our proposal could lead to improved accuracy in balance of payments statements. tDiscLussant: John A. Sawyer, University of Toronto.

Beginning in the late 1950's, the federal government has supported several programs to develop commercial uses of space. Early on, the National Aeronautics and Space Administration (NASA) supported the development of several generations of communications satellites. In the 1970's, NASA developed the Space Shuttle which, although officially declared operational, still consumed much of NASA's budget in the 1980's. These projects exemplify a class of programs in which the government seeks to advance technology to serve specific commercial objectives. NASA may regard exploring and using space as a valid national goal, but both of these projects were justified externally on economic grounds-both would reduce costs of existing activities, and make possible new commercial activities. The two programs met different fates. The communications satellite program, after producing several important commercial advances, was killed in 1973. The Space Shuttle, despite cost overruns and performance underruns, survived political challenges and appears to be permanent. The purpose of this paper is to apply recent developments in the theory of policy decisions by elected officials to illuminate the adoption, implementation, performance, and ultimate fate of these programs.

We explore a new mechanism by which investors take correlated shortcuts and present evidence that managers—using sales management—take advantage of these shortcuts. Specifically, we exploit a regulatory provision wherein a firm's primary industry is determined by the highest sales segment. Exploiting this regulation, we provide evidence that investors classify operationally nearly identical firms as starkly different depending on their placement around this sales cutoff. Moreover, managers appear to exploit this by manipulating sales to be just over the cutoff in favorable industries. Further evidence suggests that managers engage in activities to realize large, tangible benefits from this opportunistic action. Received July 28, 2014; accepted February 8, 2016 by Editor Andrew Karolyi.