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Is there an easy cure for low growth?

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  • John Fernald

    (Federal Reserve Bank of San Francisco
    INSEAD Business School)

Abstract

The U.S. economy faces sizeable headwinds to keeping GDP growth even at 2% over the next decade. Demographics imply that labor force growth will be much slower than historical norms. The enormous twentieth century increase in average educational attainment is unlikely to be repeated. And the best guess for productivity growth is that it will continue to be modest—perhaps along the lines seen in the 1970s to early 1990s, or since 2004. There are no easy cures for low growth. We can hope for another wave of broadbased IT-linked innovation. But while there is enormous uncertainty, even worthwhile policy steps are unlikely to move the dial very much on their own.

Suggested Citation

  • John Fernald, 2017. "Is there an easy cure for low growth?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 52(3), pages 175-180, July.
    • Handle: RePEc:pal:buseco:v:52:y:2017:i:3:d:10.1057_s11369-017-0042-4
    DOI: 10.1057/s11369-017-0042-4
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    References listed on IDEAS

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    1. Robert J. Gordon, 2016. "The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War," Economics Books, Princeton University Press, edition 1, number 10544.
    2. John G. Fernald, 2015. "Productivity and Potential Output before, during, and after the Great Recession," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 1-51.
    3. David M. Byrne & John G. Fernald & Marshall B. Reinsdorf, 2016. "Does the United States Have a Productivity Slowdown or a Measurement Problem?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 109-182.
    4. Cette, Gilbert & Fernald, John & Mojon, Benoît, 2016. "The pre-Great Recession slowdown in productivity," European Economic Review, Elsevier, vol. 88(C), pages 3-20.
    5. Ryan A. Decker & John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2016. "Declining Business Dynamism: What We Know and the Way Forward," American Economic Review, American Economic Association, vol. 106(5), pages 203-207, May.
    6. Ulrich K. Müller & Mark W. Watson, 2016. "Measuring Uncertainty about Long-Run Predictions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(4), pages 1711-1740.
    7. Gustavo Adler & Romain A Duval & Davide Furceri & Sinem Kılıç Çelik & Ksenia Koloskova & Marcos Poplawski Ribeiro, 2017. "Gone with the Headwinds; Global Productivity," IMF Staff Discussion Notes 17/04, International Monetary Fund.
    8. John G. Fernald & Robert E. Hall & James H. Stock & Mark W. Watson, 2017. "The Disappointing Recovery of Output after 2009," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 1-81.
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