Calendrier du 04 juin 2019
Applied Economics Lunch Seminar
Du 04/06/2019 de 12:30 à 13:30
Salle R1-09, Campus Jourdan, 48 boulevard Jourdan, 75014 Paris
GEEROLF François (UCLA)
Reassessing Dynamic Efficiency
Since Abel et al. (1989), it is generally assumed that the net marginal product of capital is higher than the growth rate, a situation called “dynamic efficiency”, where increasing aggregate saving is beneficial in the long run. In this paper, I revisit this question methodologically and empirically, leveraging the availability of new and better data. I contrast marginal and average returns, accumulation and valuation effects, finite and infinitely-lived assets, realized and expected returns, the returns to produced assets and other components of capital income (land and monopoly rents). My preferred estimate is that the net marginal product of capital is everywhere lower than the growth rate. Under neoclassical assumptions, the capital stock and investment are too high, and lower aggregate saving crowds out excess capital accumulation. If aggregate investment is not interest elastic as in early Keynesian growth models, consistently with most microeconomic evidence, then excess saving leads to persistently low output (“secular stagnation”) instead of excess capital accumulation; and lower aggregate saving boosts output permanently.