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Long‐Run Growth Projections And The Aggregate Production Function: A Survey Of Models Used By The U.S. Government

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  • KEVIN J. STIROH

Abstract

This paper examines the theory and method behind the long‐run growth projections of four prominent models used within the U.S. government. The growth models of the Congressional Budget Ofice, the Social Security Administration, the Office of Management and Budget, and the General Accounting Office are all firmly based on the neoclassical framework of an aggregate production function, but several practical dfferences exist. Most notably, the CBO and GAO models endogenize capital accumulation, while the SSA and OMB simply assume that labor productivity growth will continue at historical rates. Although recent endogenous growth theory and the expanding empirical literature on cross‐sectional variation emphasize alternative factors, the US. government agencies remain appropriately committed to the traditional, neoclassical framework as a tool for projecting long‐run growth.

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  • Kevin J. Stiroh, 1998. "Long‐Run Growth Projections And The Aggregate Production Function: A Survey Of Models Used By The U.S. Government," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 467-479, October.
    • Handle: RePEc:bla:coecpo:v:16:y:1998:i:4:p:467-479
    DOI: 10.1111/j.1465-7287.1998.tb00534.x
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    References listed on IDEAS

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    1. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
    2. Dale W. Jorgenson, 1996. "Technology in growth theory," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 40(Jun), pages 45-89.
    3. Auerbach, Alan J., 1997. "Quantifying the Current U.S. Fiscal Imbalance," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(3), pages 387-398, September.
    4. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    5. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
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    1. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2008. "A Retrospective Look at the U.S. Productivity Growth Resurgence," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 3-24, Winter.
    2. Eric Miller, 2008. "An Assessment of CES and Cobb-Douglas Production Functions: Working Paper 2008-05," Working Papers 19992, Congressional Budget Office.
    3. John Stephenson & Grant Scobie, 2002. "The Economics of Population Ageing," Treasury Working Paper Series 02/04, New Zealand Treasury.
    4. Barabas, György & Gebhardt, Heinz & Münch, Heinz Josef & Schmidt, Christoph M. & Schmidt, Torsten & Breitung, Jörg, 2005. "Methoden mittelfristiger gesamtwirtschaftlicher Projektionen: Dienstleistungsvorhaben im Auftrag des Bundesministeriums für Wirtschaft und Arbeit, Projektnummer 02/05. Vorläufiger Endbericht," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 69948.

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