Review of Economic Studies Vol. 56 No. 1 1989

Assessing Dynamic Efficiency: Theory and Evidence

A. B. Abel^1,2; N. G. Mankiw³; L. H. SUMMERS³; Richard Zeckhauser³

¹ California University of Pennsylvania · ² University of Pennsylvania · ³ Harvard University Press

Abstract

The issue of dynamic efficiency is central to analyses of capital accumulation and economic growth. Yet the question of what characteristics should be examined to determine whether actual economies are dynamically efficient is unresolved. This paper develops a criterion for determining whether an economy is dynamically efficient. The criterion, which holds for economies in which technological progress and population growth are stochastic, involves a comparison of the cash flows generated by capital with the level of investment. Its application to the United States economy and the economies of other major OECD nations suggests that they are dynamically efficient.

DOI

10.2307/2297746

Volume

56

Issue

1

Pages

1-19

Language

en

Sources

crossref bibtex:phds-export.bib openalex

Cite

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