A good deal of research, including the Board’s large-scale econometric model of the U.S. economy (FRB/US), suggests that what is called Say’s law still holds.
7 That is, in the model, an increase in the level of productivity (reflecting, for example, some technological advance) causes businesses and financial markets to revise upward their views about the level of expected profits, and it causes households to revise upward their views about the level of permanent income.