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Remarks at a Panel on Productivity at the Annual Meetings of the American Economic Association

By John B. Taylor

Abstract

A dozen years ago at policy panels like this one today, economists were focused on the reasons for the great U.S. productivity slowdown which had begun 20 years earlier. The policy objective was obvious: to end the slowdown, raise productivity growth, and thereby to increase the resources available for both private and public use. Numerous policies were proposed from larger tax incentives to increased spending on R&D. Some proposed setting a long term national goal of increasing labor productivity growth by a certain amount, say, by one percentage point per year (Taylor (1998)). Others calculated the benefits that would flow if the dream of higher productivity growth ever came true. As we all know now, that dream did come true. The productivity resurgence was actually underway while the slowdown was still being discussed. In retrospect this accomplishment started around 1995. As shown in Figure 1, the increase in productivity growth was 1 percentage point, about the same as the goal that some had set. Now that we are a dozen years into the resurgence, economists are doing retrospectives on its causes, effects, and likely longevity. (See Dew-Becker and Gordo

Year: 2008
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