Tuesday, June 14, 2011

How fast can we grow and for how long

Everyone is now on the Pawlenty case about sustained 5% growth for ten years. I leave it to the grad students:

Assume you have no shortage of new technology for ten years, and that we are biologically enabled for only one growth rate.

Answer:
The economy contracts as far as it can without splitting up the monetary zone, then the economy rebuilds itself using the newer technology. 

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