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Performance of U.S. Economy: Are there Problems Ahead? Edward C. Prescott September 21, 2006

Performance of U.S. Economy: Are there Problems Ahead? Edward C. Prescott September 21, 2006. Performance 1959.I to 2005.II. U.S. Detrended (2%) GDP per Non-Institutional Pop. Age 16-64. Expansions and Contractions. Post 1990 Performance.

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Performance of U.S. Economy: Are there Problems Ahead? Edward C. Prescott September 21, 2006

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  1. Performance of U.S. Economy: Are there Problems Ahead?Edward C. PrescottSeptember 21, 2006

  2. Performance 1959.I to 2005.II U.S. Detrended (2%) GDP per Non-Institutional Pop. Age 16-64

  3. Expansions and Contractions

  4. Post 1990 Performance U.S. Detrended (2%) GDP per Non-Institutional Pop. Age 16-64

  5. The Late 1990 Boom • Wasn’t low tax rates • Wasn’t high “productivity” • Wasn’t Greenspan • Was technology shocks that led to huge expensed and sweat investment

  6. Are Americans Saving Enough? Answer: YES

  7. Is the Deficit a Problem? Answer: NO

  8. Is the Current Account Deficit a Problem?

  9. What is Going on? • Big unmeasured investment abroad • Value of our foreign assets bigger • Don’t see value of foreign subsidiaries – just sum of value of American domestic corporations plus their foreign subsidiaries

  10. Conclusion • U.S. economy is doing well – better than Europe or Japan Why? • Taxes have not been increased • Government regulatory policy better • One big problem is the destruction of a once good system of commercial law – but, there have been some recent modest reforms.

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