Tuesday, May 30, 2023

US and Singapore know how to grow

 From Jon Hartley's tribute to Bob Lucas in NATIONAL REVIEW:

In the 1980s, Lucas stopped doing work on business cycles (the subject that had originally made him famous in his work on rational expectations) once he realized that the concerns of broad-based economic growth and long-term economic trends far outweighed the importance of business-cycle fluctuations. In other words, a recession that may cause the U.S. — per capita — to lose 5 percent of GDP (like during the Great Recession) pales in comparison to the fact that U.S. GDP per capita has grown 300 percent in real terms from the end of World War II to 2023, or the fact that the GDP per capita of the U.S. remains 550 percent greater than the GDP per capita of China or 3,100 percent greater than the GDP per capita of India.


Lucas famously wrote, in what would become his most cited paper, “On The Mechanics of Economic Development,” that “the consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else.”

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