Forthcoming in the NBER Macroeconomics Annual 2003. We thank Olivier Blanchard, Ian Bond, Jeff Campbell, Mark Gertler, Elhanan Helpman, Dale Jorgenson, John Laitner, Jim Morsink, John Nichols, Ken Rogoff, Bob Triest, Gianluca Violante, and Christina Wang for helpful comments and discussions. We thank Shanthi Ramnath and Sunil Kapadia for superb research assistance. The views expressed in this paper are those of the authors and do not necessarily represent the views of others affiliated with the Federal Reserve System or the Bank of England. The views expressed herein are those of the authors and are not necessarily those of the National Bureau of Economic Research.