slows and as, with a lag, nominal compensation per hour accelerates, the growth rate of real compensation per hour increases so that over time workers share in the benefits of faster productivity growth. indeed, in the past, any rise in the level of productivity has eventually been kroszner ( 2006a ) discusses the need for better data to help identify emerging economic developments more accurately and promptly. this point is explored in kroszner ( 2006b ). fully translated into a rise in the level of real compensation per hour. how quickly the re - equilibration takes place depends in part on the extent of competition in product markets and the nature of the wage - bargaining process. up until now, the process in our economy has taken at least a few years, but it has always occurred. productivity and real compensation per hour what i have dubbed the re - equilibration of productivity and real compensation per hour is just another manifestation of one of the great stylized facts of macroeconomics : in the past, deviations in the labor share of income from its mean value of roughly two - thirds have eventually been reversed. but the twothirds share is an empirical observation about the u. s. economy ; it is not an immutable number derived from the first principles of economic theory. as it turns out - i ’ ll leave the proof to you as a homework assignment - mean reversion in the labor share is equivalent to the observation that over time labor productivity and real compensation per hour have moved together ; in the jargon of econometrics, they are co - integrated. ( see chart. ) as i just mentioned, when the labor share deviates from its long - run average or, equivalently, a gap opens between productivity and real compensation per hour, the reversion to the mean ( that is, the closing of the gap ) can take quite a while. in recent years, the labor share has moved down as increases in real compensation per hour have, for the most part, lagged behind productivity growth, but the timing and extent of the change in the labor share depends in part on the particular statistical measure chosen. 13 compensation per hour in the nonfarm business sector is reported to have increased at an annual rate of 13. 7 percent in the first quarter of 2006. as a result, real gross domestic income, or gdi ( that is, the real value of the goods and services produced in the united states

year calling for an international initiative to update accounting standards so as to adequately deal with the complexity of derivative financial instruments. we should do our utmost to ensure that the enron affair serves as a powerful incentive to speed up efforts in this field. second, the case highlights the question of adequate oversight of financial activities undertaken by non - financial corporations. despite being the main dealer, market - maker, and liquidity provider in important areas of the energy and other derivatives markets, enron was not required, by either regulators or market practice, to disclose information to its counterparties, or to set aside capital against its trading risks. the absence of such mechanisms prevented an early detection of the problem and might have even created incentives for imprudent risk - taking. finally, the case suggests that our system is not sufficiently alert to possible conflicts of interest. the combination of auditing and consulting in the enron case is only one example. such conflicts arise whenever a financial institution provides corporate finance and similar services to a specific client who issues securities in which the financial institution can invest its own funds or those of its clients. all in all, these three issues give cause for concern and also deserve careful consideration by public authorities. my feeling here is that, if a player such as enron is not under the control of regulators, it should be under tight market control exercised by analysts, accountants, shareholders and lending banks. if these endogenous controllers fail to be alert, they should be sanctioned in the form of monetary losses or regulatory constraints. argentina : hands - off approach coupled with official sector weakness let me turn to argentina. here, the lessons are at the international macro - economic level. not too long ago, argentina was the focus of attention, though for very different reasons than now. in the early 1990s, “ neo - liberal ” economic reforms were implemented ; hyperinflation was brought to a halt ; the economy was progressively deregulated and privatised. as macro - economic stability was achieved, foreign capital poured into the economy and growth quickly resumed. in a continent that had just emerged from the debt crisis of the 1980s and with very few success stories to tell, argentina ’ s experience under this economic paradigm was very positive for much of the 1990s, growing at an average rate of nearly 5 per cent from 1991 to 1998. this was a period marked by a series of external shocks, which argentina ’ s currency board successfully overcame, namely, the “ tequila ” crisis in 1995, the east asian