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Macroeconomic Policy and potential growth

Listed author(s):
  • Jérôme Creel

    ()

    (OFCE Sciences Po & ESCP-Europe)

  • Maurizio Iacopetta

    (OFCE-SciencesPo & SKEMA Business School)

We make the case for investigating the gap between the potential and the actual level of production, and review contributions that point to the reduced power of standard policy in- struments in presence of a prolonged gap. We also highlight di¢ culties in measuring where an economy stands relative to its potential. We review links between human capital accumulation and technology, and sketch a basic Schumpeterian model that puts at the center stage of the growth process investments in innovation and the foundation of new Örms, arguably two key sources of growth that could revitalize the faltering European Economies. The gap between the short and long run behavior is illustrated through quantitative experiments.

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File URL: http://www.ofce.sciences-po.fr/pdf/dtravail/WP2015-15.pdf
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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2015-15.

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Date of creation: May 2015
Handle: RePEc:fce:doctra:1515
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