Issues Concerning the Definition, Measurement and Forecasting of Productive Capacity

Laurence H. Meyer
1977 Review  
It would be difficult to identify a more important macroeconomic issue (and one about which there was more disagreement) than recent developments affecting the level and rate of growth in the nation's productive capacity. Knowledge of the gap between actual and potential output is of ininediate relevance to the design of short-run stabilization policy and recent projections of slower growth in productive capacity and the possible relation to slower growth in capital stock appear to have
more » ... ear to have heightened the interest of both the Administration and Congress in tax reform keyed to expanding Incentives for capital spending. The Perry, Clark, Sd Rasche-Tatom papers are attempts to provide the empirical evidence on the level and anticipated rate of growth of potential output that is essential to designing such policies. However, their approaches leave the question of the level of potential output quite unsettled and their projections of future growth rates are mostly conjectural.
doi:10.20955/r.59.147-156.rgy fatcat:b3lejx4dnbhenheiyfcdur24ve