The key is that we’re anticipating some acceleration in productivity again as capital accumulation picks up. So we expect to get an additional benefit for a while.

Yes. And in our view, that is indicative of the productivity story having played itself out. We would expect, as the productivity story is played out, that the labor share would tend to come back to its historical average.

The labor share has come back up to near its average.

Absolutely. I meant productivity growth. In open economies output per person grows faster.

Our reading of the literature on where productivity comes from and where technological progress comes from is that whether or not greater competitive pressure is a factor driving greater productivity growth seems to be an open question. One shred of evidence in that regard comes from international comparisons of growth ...

It certainly is a story for why investment collapsed and why it might not rebound right away. I think you are right that people do seem to be more cautious now.

We think the productivity effect indeed may be just about played out, but we do believe that the other labor market developments are going to be more durable. So that portion we expect to continue.

Thank you, Mr. Chairman. Our presentation this afternoon,

entitled “Explaining Low Inflation since the Mid-1990s” reflects joint work with Flint

Brayton and David Lebow and will be presented by myself and David. As shown in

the upper left panel of your first exhibit, the rate of unemployment fell through the ...