TY  - JOUR
AU  - McGrattan,Ellen
AU  - Prescott,Edward
TI  - Why Did U.S. Market Hours Boom in the 1990s?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12046
PY  - 2006
Y2  - February 2006
UR  - http://www.nber.org/papers/w12046
L1  - http://www.nber.org/papers/w12046.pdf
N1  - Author contact info:
Ellen McGrattan
Research Department
Federal Reserve Bank of Minneapolis
90 Hennepin Avenue
Minneapolis, MN 55480
Tel: 612/204-5523
Fax: 612/204-5515
E-Mail: erm@mcgrattan.mpls.frb.fed.us

Edward C. Prescott
Arizona State University
Economics Department
P. O. Box 879801
Tempe, AZ 85287-9801
E-Mail: edward.prescott@asu.edu
AB  - During the 1990s, market hours in the United States rose dramatically.  The rise in hours occurred as gross domestic product (GDP) per hour was declining relative to its historical trend, an occurrence that makes this boom unique, at least for the postwar U.S. economy.  We find that expensed plus sweat investment was large during this period and critical for understanding the movements in hours and productivity.  Expensed investments are expenditures that increase future profits but, by national accounting rules, are treated as operating expenses rather than capital expenditures. Sweat investments are uncompensated hours in a business made with the expectation of realizing capital gains when the business goes public or is sold.  Incorporating expensed and sweat equity into an otherwise standard business cycle model, we find that there was rapid technological progress during the 1990s, causing a boom in market hours and actual productivity.
ER  -