Part 6

Acknowledgements

We would like to thank Wallace E. Larimore for statistical consultation and Gwendolyn Cavanaugh, Michael Dillbeck, Kenneth Chandler, and Geoffrey Wells for helpful comments. We would also like to express our thanks to John Dey, Scott Herriott, Ron Chase, and Ken Sewall for their interest and support.

Notes

1The economic importance of improvements in the quality of human resources is highlighted by the increasing importance of so-called "knowledge industries" and "knowledge workers" in advanced industrial economies like the U.S. and Japan (Machlup, 1987). Production processes, like goods and services, are becoming more "knowledge intensive", thus increasing the demand for a more skilled, educated, and creative workforce. The rate of growth of knowledge industries and knowledge occupations in the U.S. and Japan have substantially exceeded the growth rate of GNP and of the labor force, respectively (Machlup, 1987). [Back]

2According to an influentiall World Bank study (1980, p. 36) of human resources and economic development, the natural resources of a country are not consistently correlated with either its level of natural output or its rate of economic growth. Also, where natural resources have contributed significantly to growth, the discovery, utilization, and management of those resources has ultimately been based upon the application of human intelligence and creativity. [Back]

3The negative relationship between the unemployment rate and the rate of economic growth is given by "Okun's law". More precisely, the empirical regularity known as Okun's law states that the unemployment rate will decline by 0.4 percentage point for every 1 percentage point of annual real GNP growth above its trend rate of growth (Dornbusch and Fischer, 1988, pp. 573-574). Likewise, many economists believe that the inflation rate and the unemployment rate are negatively related in the short run. The hypothesized negative short-run relation between inflation and unemployment is described by the so-called "Phillips curve" (Dornbusch and Fischer, 1988, p. 573). The widely accepted Phillips curve theory implies that, other things being equal, attempts to reduce unemployment through stimulating economic growth tend to generate increased inflation in the short run; thus the net effect of the misery index will depend on whether the increase in inflation is greater than the reduction in unemployment. During the current U.S. economic expansion, however, the longest peacetime expansion in U.S. history has been associated with substantial declines in both inflation and unemployment. [Back]

4 The term "stagflation" refers to the simultaneous occurrence of economic stagnation (economic recession) and inflation. [Back]

5On three occasions when the size of the MIU group was briefly exceeded by that of temporary TM-Sidhi groups (World Peace Assemblies) in Washington, D.C., and Amherst, Massachusetts, the size of the larger group was used in the calculation of the monthly average size of the Super Radiance group. [Back]

6 In calculating the misery index series for the U.S., the rate of inflation was computed from the month-to-month percent change in the consumer price index for all urban consumers (CPI), seasonally adjusted, BCD series 320c, as reported in Business Conditions Digest, March 1988 (p. 98) and July 1988 (p. 84). The compound annualized inflation rate, in percentage units, was calculated as 100[(1+d)12-1] where d is the monthly percent change in the CPI (in decimals). Unemployment was measured by the civilian unemployment rate, seasonally adjusted, BCD series 43, from Business Conditions Digest, July 1988 (p. 62) and February 1988 (p. 99). [Back]

7Through June of 1990, the U.S. economy had experienced 92 months of uninterrupted economic expansion, beginning in November 1982. The average for all six previous peacetime post-World War II expansions was 34 months (U.S. Department of Commerce, July 1988, p. 102). Canada likewise has enjoyed a remarkably sustained economic expansion of roughly the same duration which began near the end of 1982. Although the small number of data points makes it difficult to statistically test the hypothesis that the unprecedented longevity of the current U.S. economic expansion is related to the rise in the size of the Super Radiance group to level consistently exceeding the square root of 1% threshold, it is perhaps more than an intriguing coincidence that (1) both the U.S. and Canadian economic expansions began a few months after the Super Radiance group at MIU first began to frequently exceed the predicted critical threshold for the U.S. on a monthly average basis beginning in the spring of 1982, and (2) that the U.S. expansion continued unabated, despite widespread and repeated predictions of its imminent demise (Pluckhahn, 1989, p. 1), during the portion of the last decade in which the MIU group exceeded the predicted square root of 1% critical threshold on a consistent basis. [Back]

8While progress has been slower in resolving some important remaining economic problems, principally the large U.S. trade and federal budget deficits, both of these "twin deficits" have declined as a proportion of GNP since the mid-1980s; for example, America's total budget deficit for all levels of government (the most economically relevant measure) fell from 3.5% of GNP in 1986 to approximately 1.5% in 1989 (The Economist, 1990, p. 73). Also, contrary to many repeated forecasts, neither deficit prevented the substantial decline and ultimate stabilization of both inflation and unemployment or aborted the unprecedented economic expansion. Just as much of the dire predicted effects of the trade and budget deficits have yet to materialize, some other widely predicted problems, such as alarming predictions of basic materials shortages in the 1980s, never emerged (Pluckhahn, 1989). One economist asked to summarize the economic lessons of the 1980s concluded: "The pessimists are usually wrong "(Pluckhahn, 1989, p. 1). [Back]

9For Canada, the rate of inflation was approximated by the first difference of the natural logarithm of the monthly consumer price index, not seasonally adjusted, multiplied by a factor of 1200 to annualize the rate and express it in percentage units. It is well known that for sufficiently small percentage changes in the untransformed series, the first difference of the natural logarithm closely approximates the continuously compounded rate of change of the original series. Canadian unemployment was measured by the civilian unemployment rate (seasonally adjusted) as reported in Main Economic Indicators, Historical Statistics 1960-1979 (Organisation for Economic Co-operation and Development, 1980, p. 29) and in the following issues of Main Economic Indicators (Organisation for Economic Co-operation and Development, December 1979, p. 69; December 1980, p. 69; December 1981, p. 81; December 1982, p. 81; December 1983, p. 83; December 1984, p. 87; December 1985, p. 87; December 1986, p. 87; December 1987, p. 89; December 1988, p. 91; February 1989, p. 95). [Back]

10The test that the Super Radiance group had no effect on the misery index during this period was based on a likelihood ratio test of the hypothesis that the impact assessment parameter estimates for each country were all equal to zero. For the U.S., the likelihood ratio test statistic was l = 16.88, where l is approximately distributed as a chi-square variable with 6 degrees of freedom. For Canada, l = 25.35, with 4 degrees of freedom. See Cavanaugh (in press) for further details. [Back]

11Technically, this probability is conditional on the adequacy of the time series models, but the diagnostic checks of model adequacy indicate that the model for both the U.S. and Canada were satisfactory. [Back]

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