Due to the Lucas lectures, Romer found himself with a new sense of popularity. He was invited to present a paper at NBER (National Bureau of Economic Research) in Cambridge in 1987. There were a lot of questions during this post Reagan revolution. Many raised questions about exchange-rate fluctuations, budget deficits and more. However, the biggest question was of the productivity slowdown in the United States.
Romer, being as intelligent as he was, saw this as an opportunity to not only say something about it, but to show how his model worked, especially in difference to the Solow model. He titled his paper “Crazy Explanations for the Productivity Slowdown.” As Romer further explored the convergence debate about differing rates of economic growth among nations, it all may have amounted to nothing, but as the author says, a “wild-goose chase.”
A for Tom.
ReplyDeleteSo think about this: the son of the John Deere dealer, is now the son of the Governor, and being cited by the biggest names in macroeconomics. Does that sound like a career path that's possible for you? If not him, why not you?
So, what is the crazy explanation for the growth slowdown? It's too many people. It's the idea, covered right in the beginning of doing the Solow model, that more people is a problem for the orchard, because they require more trees to feed them. In the case of the U.S., the productivity slowdown that started in the early to mid-70s may have resulted from the baby boom of 25 years before.