by James S. Albus
Abstract
Productivity growth, and hence economic growth, is a function of the investment rate. This suggests that a desired rate of economic growth could be achieved, given the required rate of investment. Prices are a function of consumer demand. This suggests that a desired rate of inflation could be achieved, given the required rate of saving. In this paper, two new institutions are proposed for the purpose of achieving the required rates of investment and savings, and for equitably distributing the benefits of rapid productivity growth. Specifically, it is suggested that 6% real economic growth could be achieved in the United States with less than 4% inflation by increasing the current national investment rate by 12% of GDP, while increasing the savings rate by 4% of GDP.