Cover: Macroeconomic Strategy for the 1990s

Macroeconomic Strategy for the 1990s

Getting the Long Run Right

Published 1993

by Robert A. Levine, Peter Stan


Download eBook for Free

FormatFile SizeNotes
PDF file 1.9 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.


Purchase Print Copy

 Format Price
Add to Cart Paperback67 pages $15.00

The central economic debate for the first half of 1993, couched in terms of short-run economic stimulus versus long-run deficit reduction was misleading for U.S. long-run strategy. Our long-run depends on growth, but economic growth does not have the close relationship to deficit reduction that is frequently asserted, and deficit reduction should not become the central objective of economic strategy that it is becoming. It has been asserted that: (1) U.S. productivity is decreasing, but the record of the 1980s does not bear this out; (2) productivity increases depend on increased investment in business plant and equipment, but technological change and associated factors like education are important; and (3) investment in U.S. plant and equipment has been decreasing because of decreased American savings caused by increased deficits, but investment has not been decreasing, although more of it has been financed from abroad. In any case, increased consumption is frequently a better way of increasing investment than is increased saving. The drive to cut the deficit may thus exert a long-run downward pressure on growth and employment. Further, it may also cut back public expenditures for infrastructure and other needs, which may be as important for growth as private investment. None of this means that the deficit should be ignored. It does mean that it should be put into proper proportion relative to the total of the factors needed to encourage economic growth.

This report is part of the RAND monograph report series. The monograph/report was a product of RAND from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

This research in the public interest was supported by RAND, using discretionary funds made possible by the generosity of RAND's donors, the fees earned on client-funded research, and independent research and development (IR&D) funds provided by the Department of Defense.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.