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New Estimates of Prewar Gross National Product and Unemployment

Published online by Cambridge University Press:  03 March 2009

Christina Romer
Christina Romer
Affiliation:
The author is Assistant Professor of Economics and Public Affairs, Woodrow Wilson School, Princeton University, Princeton, New Jersey 08544
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Abstract

The paper examines in detail revised estimates of unemployment and gross national product for the United States before 1929. It first discusses the nature of the revisions to each series and contrasts the assumptions underlying the new data with those underlying the Kuznets GNP series and the Lebergott unemployment rate series. It then examines the business cycle properties of the new prewar estimates. In analyzes the volatility and serial correlation properities of the new macroeconomic series and investigates the Okun's Law relationship between unemployment and GNP, concluding with an evaluation of the assumptions underlying the old and new data.

Type
Papers Presented at the Forty-Fifth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 46 , Issue 2 , June 1986 , pp. 341 - 352
Copyright
Copyright © The Economic History Association 1986

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References

The author is Assistant Professor of Economics and Public Affairs, Woodrow Wilson School, Princeton University, Princeton, New Jersey 08544. She wishes to thank David Romer and Peter Temin for extremely helpful comments and suggestions.

1 Romer, Christina, “Spurious Volatility in Historical Unemployment Data,” Journal of Political Economy 94 (02 1986), pp. 1–37,CrossRefGoogle Scholar and “The Prewar Business Cycle Reconsidered: New Estimates of Gross National Product, 1872–1918” (unpublished manuscript, Princeton University, 1985).Google Scholar

2 Kuznets, Simon, Capital in the American Economy: Its Formation and Financing (Princeton,1961).Google Scholar

3 Kendrick, John, Productivity Trends in the United States (Princeton, 1961);Google ScholarGallman, Robert, “Gross National Product in the United States, 1834–1909,” in Output, Employment, and Productivity in the United States after 1800, Studies in Income and Wealth (New York, 1966), vol. 30, pp. 3–76.Google Scholar

4 Shaw, William, Value of Commodity Output since 1869 (New York, 1947).Google Scholar

5 Lebergott, Stanley, Manpower in Economic Growth: The American Record since 1800, Economics Handbook Series (New York, 1964).Google Scholar

6 See, for example, DeLong, J. Bradford and Summers, Lawrence, “The Changing Cyclical Variability of Economic Activity in the United States,” National Bureau of Economic Research, no. 1450 (09 1984);Google Scholar and Baily, Martin Neil, “Stabilization Policy and Private Economic Behavior,” Brookings Papers on Economic Activity, 1 (1978), pp. 11–50.CrossRefGoogle Scholar

7 These periods are chosen primarily on the basis of data availability. The new GNP data I construct are available for 1872–1918. The new unemployment data are available for 1890–1930. To get the longest period of overlap, I consider 1893–1927. Three years are lost on either end because I calculate trends using a seven-year moving average. For GNP for 1919–1930 I use Kuznets's real GNP series in both the old and new series.

8 For a description of the gross value series see U.S. Board of Governors of the Federal Reserve System, Industrial Production, for 1971 (Washington, D.C., 1972).Google Scholar

9 The version of the Shaw series that I use is that presented in Kuznets, , Capital in the American Economy, Table R-21, pp. 553–54. This version includes Kuznets's changes in the Shaw series to include net exports and to transform the series from a 1913 to a 1929 base. The FRB series can only be considered over this shorter period because it is only available after 1954.Google Scholar

10 This may be because military expenditures are not fully included in the Kuznets components series.