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Why has productivity growth declined? Productivity and public investment

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  • Alicia H. Munnell

Abstract

The decline in United States productivity has been widely identified as one of the major economic problems facing the nation. This concern is understandable; productivity growth is the major determinant of the future standard of living. Economists have gone to great lengths to try to identify the reasons for the slowdown, and David Aschauer recently introduced the notion that the stock of public infrastructure, as well as the stock of private capital, may be a key to explaining changes in output from the private sector. ; This study builds upon Aschauer’s insight and explores whether changes in the amount of public capital, combined with the growth of private capital and labor, can explain most of the slowdown. The author concludes that the main causes of the productivity slowdown could be behind us, as long as public infrastructure receives badly needed attention.

Suggested Citation

  • Alicia H. Munnell, 1990. "Why has productivity growth declined? Productivity and public investment," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 3-22.
  • Handle: RePEc:fip:fedbne:y:1990:i:jan:p:3-22
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    File URL: http://www.bos.frb.org/economic/neer/neer1990/neer190a.pdf
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    References listed on IDEAS

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    1. Jorgenson, Dale W, 1988. "Productivity and Postwar U.S. Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 23-41, Fall.
    2. J. R. Norsworthy & Michael J. Harper & Kent Kunze, 1979. "The Slowdown in Productivity Growth: Analysis of Some Contributing factors," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(2), pages 387-422.
    3. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, pages 177-200.
    4. Clark, Peter K, 1978. "Capital Formation and the Recent Productivity Slowdown," Journal of Finance, American Finance Association, vol. 33(3), pages 965-975, June.
    5. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, January.
    6. Martin Neil Baily, 1981. "Productivity and the Services of Capital and Labor," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1), pages 1-66.
    7. James P. Smith & Finis Welch, 1978. "The Overeducated American? A Review Article," UCLA Economics Working Papers 147, UCLA Department of Economics.
    8. George L. Perry, 1971. "Labor Force Structure, Potential Output, and Productivity," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 2(3), pages 533-578.
    9. Griliches, Zvi, 1988. "Productivity Puzzles and R&D: Another Nonexplanation," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 9-21, Fall.
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    Keywords

    Labor productivity ; Productivity;

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