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A New View of Economic Growth$
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Maurice FitzGerald Scott

Print publication date: 1991

Print ISBN-13: 9780198287421

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198287429.001.0001

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The Slow‐Down in Productivity Growth After 1973

The Slow‐Down in Productivity Growth After 1973

(p.472) 16 The Slow‐Down in Productivity Growth After 1973
A New View of Economic Growth

Maurice FitzGerald Scott

Oxford University Press

The build‐up in inflationary pressures in many countries in the late 1960s exploded with the commodity boom and oil shock of 1973. Why did the ensuing wide swings from inflation to deflation result in such a marked slowdown in productivity growth? Many possible explanations are discussed, with mistaken and wasted investment, and the scrapping of assets that still earned positive quasi‐rents, being significant. The main lessons are the importance of stable macroeconomic conditions for growth, of realistic wage expectations, and of the need for strong animal spirits in business.

Keywords:   animal spirits, inflationary pressures, investment, macroeconomic stability, oil shock, productivity growth, realistic wage expectations, scrapping, slowdown

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