Commentary: Macroeconomic Policy and Long-Run Growth
DeLong and Summers' paper covers three principal topics. First, they document the international character of the decline in productivity growth during the past 20 years. Second, they look for macroeconomic causes of the slowdown, particularly the effect of inflation. Third, they present some evidence suggesting that the growth rate rises much more in response to investment in plant and equipment spending than for other types of investment DeLong and Summers conclude that subsidies or incentives for equipment investment are desirable. I begin by commenting on each of these points and on their conclusion before turning to some related issues.