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The positive social benefits of low unemployment are many—it helps to reduce poverty and crime and fosters more stable families and communities. Yet conventional wisdom—born of the stagflation of the 1970s—holds that sustained low unemployment rates run the risk of triggering inflation. The last five years of the 1990s—in which unemployment plummeted and inflation remained low—called this conventional wisdom into question. The Roaring Nineties provides a thorough review of the exceptional economic performance of the late 1990s and asks whether it was due to a lucky combination of economic circumstances or whether the new economy has somehow wrought a lasting change in the inflation-safe rate of unemployment. Led by distinguished economists Alan Krueger and Robert Solow, a roster of twenty-six respected economic experts analyzes the micro- and macroeconomic factors that led to the unexpected coupling of low unemployment and low inflation. The more macroeconomically oriented chapters clearly point to a reduction in the inflation-safe rate of unemployment. Laurence Ball and Robert Moffitt see the slow adjustment of workers' wage aspirations in the wake of rising productivity as a key factor in keeping inflation at bay. And Alan Blinder and Janet Yellen credit sound monetary policy by the Federal Reserve Board with making the best of fortunate circumstances, such as lower energy costs, a strong dollar, and a booming stock market. Other chapters in The Roaring Nineties examine how the interaction between macroeconomic and labor market conditions helped sustain high employment growth and low inflation. Giuseppe Bertola, Francine Blau, and Lawrence M. Kahn demonstrate how greater flexibility in the U.S. labor market generated more jobs in this country than in Europe, but at the expense of greater earnings inequality. David Ellwood examines the burgeoning shortage of skilled workers, and suggests policies—such as tax credits for businesses that provide on-the-job-training—to address the problem. And James Hines, Hilary Hoynes, and Alan Krueger elaborate the benefits of sustained low unemployment, including budget surpluses that can finance public infrastructure and social welfare benefits—a perspective often lost in the concern over higher inflation rates. While none of these analyses promise that the good times of the 1990s will last forever, The Roaring Nineties provides a unique analysis of recent economic history, demonstrating how the nation capitalized on a lucky confluence of economic factors, helping to create the longest peacetime boom in American history. Copublished with The Century Foundation

Table of Contents

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  1. Cover
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  1. Title page, Copyright
  2. pp. i-iv
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  1. Contents
  2. pp. v-vi
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  1. Contributors
  2. pp. vii-x
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  1. Foreword
  2. Richard C. Leone and Eric Wanner
  3. pp. xi-xiv
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  1. Acknowledgments
  2. pp. xv-xvi
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  1. Introduction
  2. Alan B. Krueger and Robert M. Solow
  3. pp. 18-47
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  1. Part I. Macroeconomic Perspectives
  1. Chapter 1. Prices, Wages, and the U.S. NAIRU in the 1990s
  2. Douglas Staiger, James H. Stock, and Mark W. Watson
  3. pp. 3-60
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  1. Chapter 2. Productivity Growth and the Phillips Curve
  2. Laurence Ball and Robert Moffitt
  3. pp. 61-90
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  1. Chapter 3. The Fabulous Decade: Macroeconomic Lessons from the 1990s
  2. Alan S. Blinder and Janet L. Yellen
  3. pp. 91-156
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  1. Part II. Flexible, Open Labor Markets
  1. Chapter 4. Comparative Analysis of Labor Market Outcomes: Lessons for the United States from International Long-Run Evidence
  2. Giuseppe Bertola, Francine D. Blau, and Lawrence M. Kahn
  3. pp. 159-218
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  1. Chapter 5. Have the New Human-Resource Management Practices Lowered the Sustainable Unemployment Rate?
  2. Jessica Cohen, William T. Dickens, and Adam Posen
  3. pp. 219-259
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  1. Chapter 6. The Effects of Growing International Trade on the U.S. Labor Market
  2. George Johnson and Matthew J. Slaughter
  3. pp. 260-306
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  1. Part III. Increasing Labor Supplies and Their Limits
  1. Chapter 7. Labor and the Sustainability of Output and Productivity Growth
  2. Rebecca M. Blank and Matthew D. Shapiro
  3. pp. 309-366
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  1. Chapter 8. Changes in Unemployment Duration and Labor-Force Attachment / Katharine G. Abraham and Robert Shimer
  2. pp. 367-420
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  1. Chapter 9. The Sputtering Labor Force of the Twenty-First Century: Can Social Policy Help?
  2. David T. Ellwood
  3. pp. 421-490
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  1. Part IV. The Benefits and Pitfalls of Tight Labor Markets
  1. Chapter 10. Another Look at Whether a Rising Tide Lifts All Boats
  2. James R. Hines Jr., Hilary W. Hoynes, and Alan B. Krueger
  3. pp. 493-537
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  1. Chapter 11. Rising Productivity and Falling Unemployment: Can the U.S. Experience Be Sustained and Replicated?
  2. Lisa M. Lynch and Stephen J. Nickell
  3. pp. 538-578
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  1. Index
  2. pp. 579-592
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