Definition
The National Bureau of Economic Research (NBER) is a private, non-profit research organization in the United States, dedicated to conducting and disseminating economic research. Established in 1920, it focuses on topics such as business cycles, labor economics, macroeconomics, and public policy, among others. The NBER is well-known for determining the official start and end dates of economic recessions and expansions in the U.S. economy.
Phonetic
The phonetic pronunciation of the keyword “National Bureau of Economic Research (NBER)” is: NASH – uh – nuhl BYUR – oh uv ih – KAH – nuh – mik ri – SURCH (EN – bee – ee – ahr)
Key Takeaways
- The National Bureau of Economic Research (NBER) is a private, non-profit research organization based in the United States. It is primarily focused on conducting and disseminating unbiased economic research among policymakers, academic institutions, and the public.
- Founded in 1920, the NBER is regarded as one of the most influential economic research organizations in the world. Their research includes a wide range of topics such as economic growth, taxation, business cycles, labor markets, and social welfare policies, among others.
- NBER is best known for determining the official start and end dates of economic recessions in the U.S., which is important for decision making by policymakers and investors. Additionally, it publishes several resources like working papers, data sets, and research summaries.
Importance
The National Bureau of Economic Research (NBER) is an important and influential organization in the fields of business and finance due to its role in conducting and disseminating high-quality economic research. As a private, non-profit, non-partisan research organization, the NBER brings together leading academics and experts who produce cutting-edge research that influences policy making, private sector decisions, and public understanding of economic issues. Additionally, the NBER is widely recognized and respected for determining the start and end dates of economic recessions in the United States, a task that holds significant implications for businesses, policymakers, and investors. Overall, the NBER plays a crucial role in shaping the ongoing discourse surrounding economic trends, contributing to informed decision-making and fostering a deeper comprehension of critical economic matters.
Explanation
The National Bureau of Economic Research (NBER) serves as an essential organization in the realm of finance and business specifically due to its diligent research into understanding the various intricacies that drive the economy. Established in 1920 as a nonprofit, nonpartisan research organization, the NBER remains committed to its overarching purpose which is to promote and disseminate pioneering research among academics, policymakers, and professionals. By providing objective analysis on the economic forces at work and offering valuable insights on policy influence, the NBER aids businesses, governments, and citizens in making well-informed decisions, based on factual, data-driven findings.
To accomplish its mission, the NBER actively engages in researching a wide array of topics, encompassing everything from fiscal policy, income distribution, and monetary policy to inflation, employment, and economic growth. However, one of the most well-known functions of the NBER is determining the start and end dates for economic recessions in the United States. By studying the country’s economic trends and fluctuations, the NBER’s Business Cycle Dating Committee is able to pinpoint the peaks and troughs of the economy. This vital information not only helps the general public comprehend the current state of the economy but also equips decision-makers with necessary data to devise strategies that potentially counteract negative trends and facilitate sustainable economic growth.
In conclusion, the NBER plays a pivotal role in the finance and business world as a reliable, fact-based research organization that contributes significantly to both our understanding of the economy and the implementation of effective policies.
Examples
1. Identification of U.S. Business Cycles: One of the key functions of the National Bureau of Economic Research is determining the start and end dates for U.S. business cycles, which is in turn widely adopted by policymakers for making important economic decisions. For example, NBER’s Business Cycle Dating Committee officially declared that the U.S. economy entered a recession in February 2020 as a result of the COVID-19 pandemic, ending the longest economic expansion in U.S. history. This information is critical for businesses, investors, and government authorities to assess the state of the economy and plan accordingly.
2. NBER Research on the Effects of Minimum Wage Increases: In 1994, the National Bureau of Economic Research published a study by economists David Card and Alan Krueger titled “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania.” This study analyzed employment data after the minimum wage was increased in New Jersey and compared it with neighboring Pennsylvania, where the minimum wage remained unchanged. Contrary to traditional economic theories, the study found that the increase in minimum wage did not lead to reduced employment. This research has been influential in shaping economic policy and debates about the minimum wage in the U.S. and other countries.
3. NBER Working Papers on Tax Policy: The National Bureau of Economic Research releases numerous working papers each year on various topics in economics, many of which focus on tax policy. For example, in 2012, NBER published a working paper by economists Raj Chetty, John N. Friedman, and Emmanuel Saez, titled “Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings.”
This paper examined the Earned Income Tax Credit (EITC) effects on labor market outcomes, finding that expanding access to information about the EITC could significantly increase its impact on earnings and employment. Policymakers, academics, and practitioners often use NBER’s tax policy research to develop more effective and efficient tax systems.
Frequently Asked Questions(FAQ)
What is the National Bureau of Economic Research (NBER)?
The National Bureau of Economic Research (NBER) is a private, non-profit organization based in the United States dedicated to conducting and promoting high-quality economic research to analyze and understand economic phenomena, issues, and policies. It primarily focuses on business cycles, productivity, innovation, and development.
When was the NBER founded?
The NBER was founded in 1920, making it one of the oldest economic research organizations in the United States.
Who are the members of the NBER?
The NBER consists of over 1,600 affiliated economists, including world-renowned scholars and academics from various universities, research institutions, and government agencies. Affiliates contribute their research findings, participate in meetings, and attend various conferences organized by the NBER.
What role does the NBER play in determining recessions?
The NBER’s Business Cycle Dating Committee is responsible for determining the start and end dates of the U.S. economic recessions. They do this by analyzing various economic indicators such as real GDP, employment, industrial production, and personal income, among others.
How does the NBER disseminate its research?
The NBER shares its research findings through various channels, including working papers, reports, book chapters, and journal articles. Much of its research is made available on the NBER website, while some content may be published in collaboration with academic journals and research institutions.
Are NBER conferences and meetings open to the public?
Although most NBER conferences and meetings are restricted to affiliates and invited guests, some events are open to the public or available through webcasts. The NBER also offers a comprehensive Summer Institute with specialized workshops and programs for researchers in the field of economics.
How is the NBER funded?
The NBER receives funding from a diverse range of sources, including government grants, private foundations, corporate sponsorships, and individual donations. It operates as a non-profit organization, ensuring that the majority of its funding is directed towards supporting economic research and educational activities.
How can I become an NBER affiliate?
Researchers and scholars interested in becoming NBER affiliates are encouraged to submit their research papers and publications for consideration. Selection is typically based on the quality and relevance of the submitted work, alignment with the NBER’s research topics, and the candidate’s overall research profile.
Where is the NBER located?
The NBER’s headquarters are located in Cambridge, Massachusetts, with smaller regional offices in New York City, Palo Alto, California, and other locations.
Related Finance Terms
- Business Cycle Dating Committee
- Macroeconomic Indicators
- Recessions and Expansions
- Economic Policy Research
- Working Papers
