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Assessing Dynamic Efficiency: Theory and Evidence

Author

Listed:
  • Andrew Abel
  • Gregory N. Mankiw
  • Lawrence H. Summers
  • Richard Zeckhauser
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.

Suggested Citation

  • Andrew Abel & Gregory N. Mankiw & Lawrence H. Summers & Richard Zeckhauser, "undated". "Assessing Dynamic Efficiency: Theory and Evidence," Rodney L. White Center for Financial Research Working Papers 14-88, Wharton School Rodney L. White Center for Financial Research.
    • Handle: RePEc:fth:pennfi:14-88
    as

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    References listed on IDEAS

    as
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