New Estimates Of The U.S. Economy'S Potential Growth Rate
AbstractUsing an Okun's law framework, the analysis here estimates potential growth for the 1990s as measured by both fixed- and chain-weighted GDP. It then decomposes estimated potential growth rates into labor productivity growth (LPG) and labor input growth (LIG) using a regression analysis to separate secular from cyclical changes. It compares estimates of potential output and trend productivity growth for the 1990s with estimates from earlier periods. Results indicate that eliminating the substitution bias associated with fixed-weight measures of real GDP raises estimated potential GDP growth in the 1980s but lowers it in the 1990s. A slowdown in labor force growth, with little or no change in long-term productivity growth, largely accounts for the implied slowdown in potential growth. Copyright 1996 Western Economic Association International.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Contemporary Economic Policy.
Volume (Year): 14 (1996)
Issue (Month): 4 (October)
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Other versions of this item:
- George A. Kahn, 1995. "New estimates of the U.S. economy's potential growth rate," Research Working Paper 95-08, Federal Reserve Bank of Kansas City.
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- João Sousa Andrade, 2009. "The PIGS, does the Group Exist? An empirical macroeconomic analysis based on the Okun Law," GEMF Working Papers 2009-11, GEMF - Faculdade de Economia, Universidade de Coimbra.
- João Sousa Andrade, 2007. "Uma Aplicação da Lei de Okun em Portugal," GEMF Working Papers 2007-04, GEMF - Faculdade de Economia, Universidade de Coimbra.
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