The Economist Magazine : "Both the OECD and the IMF argue that crises stunt the three main ingredients of growth: capital, labour and innovation. First, by choking off the supply of credit and throttling sales, crises depress investment and thus productivity."

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"Second, they leave prolonged high unemployment in their wake. Some workers lose their skills, which makes it hard for them to find jobs again. Others simply drop out of the workforce altogether, lowering labour-force participation rates. Third, and more controversially, the papers argue that crises undercut innovation, and the efficiency with which capital and labour are used, by interrupting the supply of capital to high-growth firms or by reducing spending on research and development."

The Economist Magazine
Humbler horizons
America’s economy is growing at an unimpressive rate. It may not be able to go much faster
May 26th 201


Humbler horizons

Some excerpts :

Potential is an inherently slippery concept. Who is to say whether a former worker or a vacant factory will ever produce again? Nor is it written in a country’s stars. How much potential is damaged will depend, in part, on how well policymakers prop up demand. The IMF notes that countries that responded to past crises with aggressive monetary and fiscal stimulus, structural reforms and rapid repair of their financial systems limited the loss of potential. American policymakers have tried to apply those lessons but not, apparently, hard enough.

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