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Start of Recession in New York State Signaled by UB Researchers
Although no official determination has been made about whether New York State or the U.S. is in the midst of a recession, researchers from the University at Buffalo's Center of Human Capital believe New York entered a recession beginning in the second quarter (April-June) of 2008. Their conclusion results from an innovative recession-dating method they developed to forecast the start of recessions at the state level. The method uses an approach similar to the one used by the National Bureau of Economic Research (NBER) to date the start and end of business cycles at the national level, using national data. Click here for more information
Breaking News - Start of Recession in New York State Signaled by UB Researchers
Release date: November 11, 2008 (text below from UB News release)
BUFFALO, N.Y. -- Although no official determination has been made about whether New York State or the U.S. is in the midst of a recession, researchers from the University at Buffalo's Center of Human Capital believe New York entered a recession beginning in the second quarter (April-June) of 2008.
Their conclusion results from an innovative recession-dating method they developed to forecast the start of recessions at the state level. The method uses an approach similar to the one used by the National Bureau of Economic Research (NBER) to date the start and end of business cycles at the national level, using national data.
The UB model uses state data and was developed for annual state revenue forecasts UB researchers provide to New York State Comptroller Thomas P. DiNapoli.
"The model very clearly shows that the New York State economy began significantly slowing down in the third quarter of the 2007 fiscal year and slipped into a recession in the second quarter of the 2008 fiscal year," says Isaac Ehrlich, SUNY and UB Distinguished Professor, chair of the UB Department of Economics and director of the UB Center of Human Capital.
The UB model factors in such indicators as the state's non-farm employment, unemployment rate and corporate tax receipts. The UB research team devised criteria to determine when these indicators collectively signal the start of a recession.
According to DiNapoli, the UB economic model sheds critical light on when the state went into recession. "It helps us better understand the impact of the current fiscal crisis on the state and how it will impact the state's revenue picture," he said. "New York State is facing serious fiscal challenges. As the economy deteriorates and the erratic swings continue on Wall Street, the state will have to make difficult fiscal choices." Ehrlich's co-researchers are Yong Yin, Ph.D., and Alejandro Rodriguez, Ph.D., both UB assistant professors of economics, and UB doctoral student Xuezheng Qin. The ability to predict the onset of a state recession is valuable to policymakers because they can more confidently see that the economy is weakening and make decisions accordingly, explains Ehrlich, who also is the Melvin H. Baker Professor of American Enterprise in the UB School of Management. "It's like having a little piece of a crystal ball looking ahead knowing there is a deteriorating economic situation."
The UB researchers' recession-dating methodology is designed to determine only the onset of a recession. It is not designed to predict the magnitude of the recession or its length, Ehrlich points out. Historical evidence indicates, however, that New York's recessions tend to last longer than those in the national economy. "This certainly was the case in the 2001 recession which lasted three quarters at the national level, but 10 quarters in New York State," Ehrlich says. "Given that the current decline has been precipitated by the implosion of the real estate bubble that created a serious financial crisis for major Wall Street investment banks and insurance companies, New York State's economy is again likely to be hit harder than the national economy. Wall Street contributes about 20 percent of all tax revenues in the state."
Testing its dating methodology backwards, the UB researchers have been able to successfully predict the starting quarters of all the past recessions in New York State for which data on the indicators were available. According to the UB researchers, New York has suffered five recessions since the 1970s. They include the recessions of 1973-75, 1980, 1981-83, 1989-1992 and 2001-03.
UB's Center of Human Capital is funded by the New York State Office of Science, Technology and Academic Research. The center focuses on the dynamic role of human capital in improving market efficiency and achieving persistent, long-term productivity growth at the firm, industry, region and economy-wide levels. The center also is researching issues and challenges facing corporations in the Western and upstate New York economies.
The University at Buffalo is a premier research-intensive public university, a flagship institution in the State University of New York system that is its largest and most comprehensive campus. UB's more than 28,000 students pursue their academic interests through more than 300 undergraduate, graduate and professional degree programs. Founded in 1846, the University at Buffalo is a member of the Association of American Universities.
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Latest Issue of Journal of Human Capital Available
The fourth issue of the Journal of Human Capital is now available. The Journal of Human Capital, published by the University of Chicago Press, is dedicated to human capital and its expanding economic and social role especially in today’s emerging “knowledge economy.” Developed in response to the growing recognition of the central role human capital plays in determining allocation, distribution, and long-term growth of economic resources, JHC is a forum for theoretical and empirical work in human capital and related public policy analysis. Click here to visit the JHC webpage at the University of Chicago and to download the first issue FREE.
Ehrlich Named to Governor's Economic Advisory Council
Renowned University at Buffalo economist Isaac Ehrlich has been named to Governor David A. Paterson's newly convened Council of Economic Advisors. The 18-member council also includes Robert Rubin, former United States Secretary of the Treasury and current chairman of the Executive Committee of Citigroup, Roger Altman, former United States Deputy Treasury Secretary and current chairman and CEO of Evercore Partners, and Joseph Stiglitz, 2001 Nobel Prize winner. Click here for more information
UB Economists Provide Revenue Forecasts to State Comptroller
Tax revenue forecasts by University at Buffalo team including Isaac Ehrlich, Ph.D., Yong Yin, Ph.D., Alejandro Rodriguez, Ph.D., and Xuezheng (Michael), Ph.D. candidate at UB's Center of Excellence on Human Capital, Technology Transfer, and Economic Growth and Development are having a significant impact on budget negotiations in determining how much the state has to spend. Please see this web page for entire article: http://www.buffalo.edu/news/9317
Mystery of Human Capital
Dr. Ehrlich's new paper looks at why the US overtook the UK and other European countries in the 20th century in both aggregate and per-capita GDP, as a case study of recent models of endogenous growth where human capital is the "engine of growth". Please see this webpage for more details.
Dr. Ehrlich quoted in the New York Times
A column in The New York Times by David Brooks on the need for Republicans to find a presidential candidate who can transcend current political categories and lay out a human-capital agenda cites research conducted by Isaac Ehrlich, SUNY and UB Distinguished Professor and chair of the Department of Economics, who showed that the United States became the richest country because in the 19th and 20th centuries it had the most schooling and the best circumstances to help people develop their own capacities. The article may be read online at http://www.buffalo.edu/news/pdf/May07/NYTimesEhrlichOpEd.pdf.
Dr. Ehrlich's mention in the NY Times is based on his recent NBER paper: Isaac Ehrlich, 2007. "The Mystery of Human Capital as Engine of Growth, or Why the US Became the Economic Superpower in the 20th Century," NBER Working Papers 12868, National Bureau of Economic Research, Inc. Downloadable from: http://ideas.repec.org/e/peh1.html, or http://papers.nber.org/papers/w12868.pdf
Journal of Human Capital Approved
The Journal of Human Capital is dedicated to human capital and its expanding economic and social role especially in today’s emerging “knowledge economy.” Developed in response to the growing recognition of the central role human capital plays in determining allocation, distribution, and long-term growth of economic resources, JHC is a forum for theoretical and empirical work in human capital and related public policy analysis.
JHC is distinguished from other economics journals by bringing together many conventional areas of economic inquiry and offering a common platform for discussion in areas ranging from labor, health, and family economics to income and wealth distributions, social mobility, institutions and politics, crime and corruption, technological innovation and transfer, productivity and structural change, and economic growth and development.
Read more at the Journal of Human Capital
Kim wins Journal of Population Econ Kuznets Prize for Best Paper 04-06
Jinyoung Kim won the Kuznets Prize for Best Paper 2004-2006 from the Journal of Population Economics for his paper "Sex selection and fertility in a dynamic model of conception and abortion", (2005) 18: 041-067. He received it in a ceremony held in June 2007.
Questions & Answers featuring Dr. Ehrlich from UB Reporter
Isaac Ehrlich is SUNY Distinguished Professor and chair of the Department of Economics, College of Arts and Sciences. He also is Melvin H. Baker Professor of American Enterprise in the School of Management and serves as director of the Center of Excellence on Human Capital, Technology Transfer and Economic Growth and Development. Read more at the UB Reporter
Becker to attend Human Capital Conference
Nobel laureate Gary Becker will be among the notable economists who will be attending the inaugural conference of the Signature Center of Excellence on Human Capital, Technology Transfer and Economic Growth and Development, being held this weekend at the Buffalo Niagara Marriott.
Read more at the UB Reporter
Ehrlich received NYSTAR award
Researchers at UB involved in diverse fields in engineering and economics have been awarded a total of $1.5 million in faculty development grants from the New York State Office of Science, Technology and Academic Research. Read more at the UB Reporter