For release: May 3, 2006

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St. Louis Fed's Review: The Geography, Economics and Politics of Lottery Adoption; The 1990s Acceleration in Labor Productivity: Causes and Measurement; The Learnability Criterion and Monetary Policy; Inflation Targeting

St. Louis, Mo. — The May/June issue of Review, the Federal Reserve Bank of St. Louis' journal of economic and business issues, features the following articles. The publication is also available on the St. Louis Fed's web site: www.stlouisfed.org.

• "The Geography, Economics and Politics of Lottery Adoption." Since New Hampshire first introduced a state-sponsored lottery in 1964, 41 states have followed. Economists Cletus C. Coughlin, Thomas A. Garrett and Rubén Hernández-Murillo identify four significant factors in states' decision to introduce a lottery: state income, lottery adoption by neighboring states, the timing of elections, and the opposition that organized religious groups bring to bear.
• "The 1990s Acceleration in Labor Productivity: Causes and Measurement." The acceleration of labor productivity growth that began during the mid-1990s was the defining economic event of the decade. A consensus has arisen among economists that technological innovation, which decreased the quality-adjusted prices of information and communications equipment, was the cause. Economists Richard G. Anderson and Kevin L. Kliesen examine the process as it unfolded during the 1990s to better understand why its timely recognition was so difficult. To do so, they review previous studies that have explored the causes of productivity acceleration, and they examine how published labor productivity data were revised during the '90s. Revision have been huge—so large in some cases as to fully reverse initial preliminary conclusions regarding productivity growth slowdowns and accelerations.
• "The Learnability Criterion and Monetary Policy." Expectations of the future play a large role in macroeconomics. The "rational expectations assumption," which is commonly used in economic literature, provides an important benchmark, but may be too strong for some applications. Economist James B. Bullard reviews some recent research that has emphasized methods for analyzing models of learning in which expectations are not initially rational but which may become so, provided certain conditions are met.
• "Inflation Targeting." This is a reprint of a speech delivered by William Poole, the president of the Federal Reserve Bank of St. Louis, on Feb. 16, 2006, in Little Rock, Ark., to Junior Achievement of Arkansas, Inc.

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