Austan Goolsbee: uncertainty

Transcript context

…On the construction productivity puzzle, what do you think is the main reason for that? That it’s negative. If it were zero — that would be a little easier to understand, but we’re forgetting how to build homes? Yes, somehow, we’re forgetting. We’re doing it worse. We tried every way we could think of to analyze this. Maybe it’s just mismeasurement, so we got evidence on the physical number of homes and the value of those homes that you could deflate by the very localized price deflators. At the best, it’s zero, and it mostly looks like we’re getting worse at it. Ed Glaeser, who’s an old friend of mine — and I know you’re a fan of his work as well — he believes that it is very much tied to land use regulation and other regulations on the construction industry, that if you go back to the 1970s or ’60s, they were moving in a modular direction. Think of it as a higher-brow prefab housing, turning construction more into manufactured good, and that the regulations, in some sense, have forced an inefficient scale on our producers, but I don’t know. We left it. We documented it, we showed what it was not, but we weren’t able to find a smoking gun for what it was. Now, in your role in running the Chicago Fed, which is like running a corporation, right?…

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