While a familiar term to even casual observers of the economy, the so-called new economy has been abused to the point of obfuscation. To some, the new economy refers to the growing importance of the Internet, e-commerce and all things high-tech; to others, it means the abolition of the traditional business cycle and workplace; to still others, it refers to the competitive pressures of expanding global markets.
But from a policymaker's point of view—especially a monetary policymaker—the new economy can be boiled down to one crucial measure of an economy's performance: productivity, or the quantity of goods and services produced from each hour of a worker's time. As Federal Reserve Chairman Alan Greenspan says in an article in this issue: "That there has been some underlying improvement in the growth of aggregate productivity is now generally conceded by all but the most skeptical. The discussion has shifted to the extent and nature of that acceleration."
So what do the words "new economy" mean? Three articles in this issue of The Region investigate that question, but with an emphasis on economic fundamentals and, ultimately, on the implications for policymaking. The articles are:
