Economist Valerie Ramey of UC San Diego gives an insightful talk charting the rise, fall and rise again of income inequality in America over the last century. She highlights the special circumstances that created a “Golden Age” for the average worker in the 1950s and 1960s and then follows with the economic changes that led to today’s extreme disparity where the top 1 percent of US households earn nearly 20 percent of the nation’s income. Ramey is presented by the Osher Lifelong Learning Institute at UC San Diego. Recorded on 10/30/2017. Series: “Osher UC San Diego Distinguished Lecture Series” [12/2017] [Show ID: 33094]
The Past, Present And Future Of US Income Inequality With Valerie Ramey
Recent papers by Kim and Nelson (1999) and McConnell and Perez-Quiros (2000) uncover a dramatic decline in the volatility of U.S. GDP growth beginning in 1984. Determining whether the source is good luck, good policy or better inventory management has since developed into an active area of research. This paper seeks to shed light on the source of the decline in volatility by studying the behavior of the U.S. automobile industry, where the changes in volatility have mirrored those of the aggregate data. We find that changes in the relative volatility of sales and output, which have been interpreted by some as evidence of improved inventory management, could in fact be the result of changes in the process driving automobile sales. We first show that the autocorrelation of sales dropped during the 1980s, and that the behavior of interest rates may be the force behind the change in sales persistence. A simulation of the assembly plants' cost function illustrates that the persistence of sales is a key determinant of output volatility. A comparison of the ways in which assembly plants scheduled production in the 1990s relative to the 1970s supports the intuition of the simulation.