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In the 1970s, businesses struggled with rising energy costs, newly imposed environmental regulations, and inflation that contributed to the slowing of productivity. By 1980, a new group of economists called “supply-siders” were calling for government deregulation to spur productivity, amidst great objections from Democrats and some economic experts. Some thought that productivity was at an end, but government-supported technological innovation spurred productivity to new heights. These stories highlight the factors that affect productivity and how government programs have both helped and hindered growth.
To explain the factors that affect productivity growth and the various ways in which the government has helped or hindered the growth in productivity.
Economist known as “The Father of Supply-Side Economics” because of his influence in shaping public policy during the 1980s, especially in the realm of tax cuts. He is Founder and Chairman of Laffer Associates, an economic research firm that provides global investment services, and was also Founder of the Congressional Policy Advisory Board that helped shape legislative policies for the 105th–107th U.S. Congresses. He served as consultant to Secretary of the Treasury William Simon, Secretary of Defense Donald Rumsfeld, and Secretary of the Treasury George Shultz, and was Chief Economist at the Office of Management and Budget and a member of President Reagan’s Economic Policy Advisory Board, 1981–1989. He is famous for inventing the “Laffer Curve,” deemed by Time magazine “one of the few advances that powered this extraordinary century.” He has taught at Pepperdine University, the University of Southern California, and the University of Chicago. Dr. Laffer received his B.A. from Yale University and M.B.A. and Ph.D. in Economics from Stanford University.
Pioneer in the development of the U.S. National Income and Product Accounts, with an international reputation as the originator of “growth accounting,” the identification and quantification of the sources of growth in real national income/product. He held many public and private sector posts, including Acting Chief of the National Income Division of the Bureau of Foreign and Domestic Commerce, Assistant Director and Chief Economist of the Office of Business Economics, and Member of the Committee for Economic Development (CED). At CED, he produced studies of the sources of economic growth and policies to promote growth, published in the landmark 1962 CED report The Sources of Economic Growth in the United States and the Alternatives Before Us. At the Brookings Institution, he applied his growth-accounting methodology in Why Growth Rates Differ and How Japan’s Economy Grew So Fast. Dr. Denison received his B.A. from Oberlin College and Ph.D. in Economics from Brown University.
Chief Economist for the U.S. Department of Commerce, since 2010, and former Senior Economist at the Federal Reserve Bank of San Francisco. He has wide experience with economic and policy analysis on a range of topics, including the effects of technology adoption and innovation on firm productivity and on housing market changes. He also spent time at the Organization for Economic Co-operation and Development, and in the early 1990s worked at the Center for Economic Studies at the U.S. Census Bureau. Dr. Doms received his B.A. from the University of Maryland and Ph.D. in Economics from the University of Wisconsin.
Take the Economics USA: Productivity Quiz.
Quiz Addendum
4. Answer explanation:
accurate, since capital formation through investment has been a major contributor to economic growth in the U.S. One of the reasons for our continued economic growth has been a 10% investment of GNP/GDP in new plant and equipment. As a result, American workers have modern facilities and equipment to support their efforts, thus making them more productive.