It has been argued that labor productivity has risen substantially in the late 1990s. Use a scatterplot and regression line (as in Problem 15.3)

for U.S. data after 1992 to estimate Yˆ ∗

. Has the “speed limit” been raised? By how much? Is there any reason to believe your estimates might systematically over- or underestimate the true modified balanced growth path? (Hint: think about how labor productivity behaves over the business cycle and where in the business cycle your data come from.)