National Bureau of Economic Research
Encyclopedia
The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end dates for recession
s in the United States.
The NBER is the largest economics research organization in the United States. Many of the American winners of the Nobel Prize in Economics were NBER Research Associates. Many of the Chairmen of the Council of Economic Advisers
have also been NBER Research Associates, including the former NBER President and Harvard Professor, Martin Feldstein
.
The NBER's current President and CEO is Professor James M. Poterba
of MIT
.
was working at the NBER when the U.S. government asked him to help organize a system of national accounts
in 1930, which became the beginning of an official measurement of GDP and other related indices of economic activity. The NBER is currently located in Cambridge, Massachusetts
with branch offices in Palo Alto, California
, and New York City
.
).
than commonly appears in the media. The traditional definition of a recession is two consecutive quarters of a shrinking gross domestic product
(GDP). In contrast, the NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.". Business cycle dates are determined by the NBER dating committee under contract with the Department of Commerce. Typically, these dates correspond to peaks and troughs in real GDP, although not always so.
The NBER prefers this method for a variety of reasons. First, they feel by measuring a wide range of economic factors, rather than just GDP, a more accurate assessment of the health of an economy can be gained. For instance, the NBER considers not only the product-side estimates like GDP, but also income-side estimates such as the gross domestic income (GDI). Second, since the NBER wishes to measure the duration of economic expansion and recession at a fine grain, they place emphasis on monthly—rather than quarterly—economic indicators. Finally, by using a looser definition, they can take into account the depth of decline in economic activity. For example, the NBER may declare not a recession simply because of two quarters of very slight negative growth, but rather an economic stagnation
.
However, they do not precisely define what is meant by "a significant decline," but rather determine if one has exoisted on a case by case basis after examining their catalogued factors which have no defined grade scale or weighting factors. The subjectivity of the determination has led to criticism and accusations committee members can "play politics" in their determinations.
Though not listed by the NBER, another factor in favor of this alternate definition is that a long term economic contraction may not always have two consecutive quarters of negative growth, as was the case in the recession following the bursting of the dot-com bubble
. For example, a repeated sequence of quarters with significant negative growth followed by a quarter of no or slight positive growth would not meet the traditional definition of a recession, even though the nation would be undergoing continuous economic decline.
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
s in the United States.
The NBER is the largest economics research organization in the United States. Many of the American winners of the Nobel Prize in Economics were NBER Research Associates. Many of the Chairmen of the Council of Economic Advisers
Council of Economic Advisers
The Council of Economic Advisers is an agency within the Executive Office of the President that advises the President of the United States on economic policy...
have also been NBER Research Associates, including the former NBER President and Harvard Professor, Martin Feldstein
Martin Feldstein
Martin Stuart "Marty" Feldstein is an economist. He is currently the George F. Baker Professor of Economics at Harvard University, and the president emeritus of the National Bureau of Economic Research . He served as President and Chief Executive Officer of the NBER from 1978 through 2008...
.
The NBER's current President and CEO is Professor James M. Poterba
James M. Poterba
James Michael "Jim" Poterba is an American economist, Mitsui Professor of Economics at the Massachusetts Institute of Technology, and current NBER president and chief executive officer.- Early years :...
of MIT
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...
.
History
The NBER was founded in 1920. Its first staff economist, director of research, and one of its founders was American economist Wesley Mitchell. The Russian American economist Simon KuznetsSimon Kuznets
Simon Smith Kuznets was a Russian American economist at the Wharton School of the University of Pennsylvania who won the 1971 Nobel Memorial Prize in Economic Sciences "for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and...
was working at the NBER when the U.S. government asked him to help organize a system of national accounts
National accounts
National accounts or national account systems are the implementation of complete and consistent accounting techniques for measuring the economic activity of a nation. These include detailed underlying measures that rely on double-entry accounting...
in 1930, which became the beginning of an official measurement of GDP and other related indices of economic activity. The NBER is currently located in Cambridge, Massachusetts
Cambridge, Massachusetts
Cambridge is a city in Middlesex County, Massachusetts, United States, in the Greater Boston area. It was named in honor of the University of Cambridge in England, an important center of the Puritan theology embraced by the town's founders. Cambridge is home to two of the world's most prominent...
with branch offices in Palo Alto, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, and New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
.
Research
The NBER's research activities are mostly identified by 19 research programs on different subjects and 14 working groups. The research programs are: Aging, Asset Pricing, Children, Corporate Finance, Development of the American Economy, Economics of Education, Economics of Fluctuation Growth, Energy and the Environment, Health Care, Health Economics, Industrial Organization, International Finance and Macroeconomics, International Trade and Investment, Labor Studies, Law and Economics, Monetary Economics, Political Economy, Productivity, and Public Economics. From this research comes the NBER's Working Papers.Nobel Prize winners
- Peter DiamondPeter DiamondPeter Diamond was an English actor who had trained at the Royal Academy of Dramatic Art and remembered as a stuntman on television or film....
, Dale Mortensen 2010 - Paul KrugmanPaul KrugmanPaul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...
2008 - Edward C. PrescottEdward C. PrescottEdward Christian Prescott is an American economist. He received the Nobel Memorial Prize in Economics in 2004, sharing the award with Finn E. Kydland, "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles"...
2004 - Finn Kydland 2004
- Robert F. EngleRobert F. EngleRobert Fry Engle III is an American economist and the winner of the 2003 Nobel Memorial Prize in Economic Sciences, sharing the award with Clive Granger, "for methods of analyzing economic time series with time-varying volatility ".-Biography:Engle was born in Syracuse, New York and went on to...
2003
- Joseph Stiglitz 2001
- George AkerlofGeorge AkerlofGeorge Arthur Akerlof is an American economist and Koshland Professor of Economics at the University of California, Berkeley. He won the 2001 Nobel Prize in Economics George Arthur Akerlof (born June 17, 1940) is an American economist and Koshland Professor of Economics at the University of...
2001 - James J. Heckman 2000
- Daniel L. McFadden 2000
- Robert C. MertonRobert C. MertonRobert Carhart Merton is an American economist, Nobel laureate in Economics, and professor at the MIT Sloan School of Management.-Biography:...
1997
- Myron S. Scholes 1997
- Robert E. Lucas 1995
- Robert W. Fogel 1993
- Gary S. Becker 1992
- George J. Stigler 1982
- Theodore W. Schultz 1979
- Milton FriedmanMilton FriedmanMilton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
1976 - Wassily LeontiefWassily LeontiefWassily Wassilyovich Leontief , was a Russian-American economist notable for his research on how changes in one economic sector may have an effect on other sectors. Leontief won the Nobel Committee's Nobel Memorial Prize in Economic Sciences in 1973, and three of his doctoral students have also...
1973 - Simon KuznetsSimon KuznetsSimon Smith Kuznets was a Russian American economist at the Wharton School of the University of Pennsylvania who won the 1971 Nobel Memorial Prize in Economic Sciences "for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and...
1971
Council of Economic Advisers (CEA) Chairpeople
In chronological order- Austan GoolsbeeAustan GoolsbeeAustan Dean Goolsbee is an American economist, formerly serving as the Chairman of the Council of Economic Advisers and the youngest member of the cabinet of President Barack Obama. Goolsbee is from the University of Chicago where he is the Robert P...
- Christina RomerChristina RomerChristina D. Romer is the Class of 1957 Garff B. Wilson Professor of Economics at the University of California, Berkeley and a former Chair of the Council of Economic Advisers in the Obama administration...
- Edward LazearEdward LazearEdward Paul "Ed" Lazear is an award-winning American economist, considered the founder of personnel economics, and was the chief economic advisor to President George W. Bush.-Career:...
- Ben BernankeBen BernankeBen Shalom Bernanke is an American economist, and the current Chairman of the Federal Reserve, the central bank of the United States. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis....
- Harvey RosenHarvey RosenHarvey Rosen was the mayor of the city of Kingston, Ontario, Canada from 2003 to 2010.Rosen was born in Kingston and obtained a Bachelor of Arts degree in Philosophy from York University in Toronto, and a Bachelor of Law degree from Queen's University in Kingston. He was called to the Bar in 1977...
- N. Gregory MankiwN. Gregory MankiwNicholas Gregory "Greg" Mankiw is an American macroeconomist and Professor of Economics at Harvard University. Mankiw is known in academia for his work on New Keynesian economics....
- R. Glenn Hubbard
- Janet YellenJanet YellenJanet Louise Yellen is an American economist and professor, who is currently the Vice Chair of the Board of Governors of the Federal Reserve System...
- Joseph Stiglitz
- Michael BoskinMichael BoskinMichael Jay Boskin is the T. M. Friedman Professor of Economics and senior fellow at Stanford University's Hoover Institution. He also is Chief Executive Officer and President of Boskin & Co., an economic consulting company.Boskin holds B.A. with highest honors, M.A., and Ph.D...
- Martin FeldsteinMartin FeldsteinMartin Stuart "Marty" Feldstein is an economist. He is currently the George F. Baker Professor of Economics at Harvard University, and the president emeritus of the National Bureau of Economic Research . He served as President and Chief Executive Officer of the NBER from 1978 through 2008...
Other notable members
- Alberto AlesinaAlberto AlesinaAlberto Francesco Alesina is an Italian political economist. He has published much-cited books and articles in major economics journals.-Background and professional life:...
- Robert BarroRobert BarroRobert Joseph Barro is an American classical macroeconomist and the Paul M. Warburg Professor of Economics at Harvard University. The Research Papers in Economics project ranked him as the 4th most influential economist in the world as of August 2011 based on his academic contributions...
- Aaron EdlinAaron EdlinProfessor and author Aaron S. Edlin is a noted expert in law and economics, specializing in antitrust. In 1997–1998, he served in the Clinton White House as Senior Economist within the Council of Economic Advisers focusing on the areas of industrial organization, regulation and antitrust...
- John LipskyJohn LipskyJohn Phillip Lipsky is an American economist. He was the acting Managing Director of the International Monetary Fund from May to July 2011. He assumed the post of Acting Managing Director after Dominique Strauss-Kahn was arrested in May 2011 accused of sexual assault...
- Francis LongstaffFrancis LongstaffFrancis A. Longstaff is the Allstate Professor of Insurance and Finance at the Anderson School of Management, University of California, Los Angeles, and the current Finance Area Chair....
- Anna SchwartzAnna SchwartzAnna Jacobson Schwartz is an economist at the National Bureau of Economic Research in New York City, and according to Paul Krugman "one of the world's greatest monetary scholars"...
- Eduardo SchwartzEduardo SchwartzEduardo Saul Schwartz is a professor of finance at the Anderson School of Management, University of California, Los Angeles, where he holds the California Chair in Real Estate & Land Economics...
- Richard ZeckhauserRichard ZeckhauserRichard Jay Zeckhauser is an American economist and the Frank P. Ramsey Professor of Political Economy at the Kennedy School of Government at Harvard University....
Policy Impact
In one study , the NBER was ranked as the second most influential Domestic Economic Policy think tank (the first was the Brookings InstitutionBrookings Institution
The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., in the United States. One of Washington's oldest think tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and...
).
Recession markers
The NBER is well known for its start and end dates of US recessions. The NBER uses a broader definition of a recessionRecession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
than commonly appears in the media. The traditional definition of a recession is two consecutive quarters of a shrinking gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP). In contrast, the NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.". Business cycle dates are determined by the NBER dating committee under contract with the Department of Commerce. Typically, these dates correspond to peaks and troughs in real GDP, although not always so.
The NBER prefers this method for a variety of reasons. First, they feel by measuring a wide range of economic factors, rather than just GDP, a more accurate assessment of the health of an economy can be gained. For instance, the NBER considers not only the product-side estimates like GDP, but also income-side estimates such as the gross domestic income (GDI). Second, since the NBER wishes to measure the duration of economic expansion and recession at a fine grain, they place emphasis on monthly—rather than quarterly—economic indicators. Finally, by using a looser definition, they can take into account the depth of decline in economic activity. For example, the NBER may declare not a recession simply because of two quarters of very slight negative growth, but rather an economic stagnation
Economic stagnation
Economic stagnation or economic immobilism, often called simply stagnation or immobilism, is a prolonged period of slow economic growth , usually accompanied by high unemployment. Under some definitions, "slow" means significantly slower than potential growth as estimated by experts in macroeconomics...
.
However, they do not precisely define what is meant by "a significant decline," but rather determine if one has exoisted on a case by case basis after examining their catalogued factors which have no defined grade scale or weighting factors. The subjectivity of the determination has led to criticism and accusations committee members can "play politics" in their determinations.
Though not listed by the NBER, another factor in favor of this alternate definition is that a long term economic contraction may not always have two consecutive quarters of negative growth, as was the case in the recession following the bursting of the dot-com bubble
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...
. For example, a repeated sequence of quarters with significant negative growth followed by a quarter of no or slight positive growth would not meet the traditional definition of a recession, even though the nation would be undergoing continuous economic decline.