The paper draws on Baumol’s (1967) model of «unbalanced growth» to show that pressing economic problems of mature economies such as declining growth rates of real GDP, an increasing government share in GDP and the «cost explosion» in health care can readily be explained – yet they cannot...

Hartwig (2008) has presented empirical evidence that the difference between real wage growth and productivity growth at the macroeconomic level is a robust explanatory variable for deflated health-care expenditure growth in OECD countries. In this paper, we test whether this finding is robust to...

The paper proposes a new test of endogenous vs. exogenous growth theories based on the Granger-causality methodology and applies it to a panel of 20 OECD countries. The test yields divergent evidence with respect to physical and human capital. For physical capital, the test results favor...

A large body of both theoretical and empirical literature has affirmed a positive impact of human capital accumulation in the form of health on economic growth. Yet Baumol (1967) has presented a model in which imbalances in productivity growth between a ‘progressive’ (manufacturing) sector...

The paper summarises and advances arguments made earlier by staff members of the Swiss Institute for Business Cycle Research in the current debate over the reasons for growth in Switzerland being weak. It is shown that the assessment of the speed of productivity growth crucially depends on how...

In a recent paper I argued that Baumol’s (1967) model of ‘unbalanced growth’ offers a ready explanation for the observed secular rise in health care expenditure (HCE) in rich countries (HARTWIG 2006). Baumol’s model implies that HCE is driven by wage increases in excess of productivity...

Since the mid-nineties, U.S. labor productivity outgrows its European counterpart by a wide margin. Several recent studies have found that this result is brought about by relatively few service industries, where productivity growth has accelerated in the U.S., but not so in Europe. Based on this...

The paper reviews the sources of «Upward bias» and «Downward bias» in the USConsumer Price Index (CPI) and discusses the changes the Bureau of Labor Statistics has introduced in order to eliminate them. The remaining biases are quantified. Also, the question is raised how much the changes to...

Macroeconometric policy simulation models allow for an analysis, and, above all, for a quantification of the effects different economic policies have on the various variables that represent the economy. Despite the seminal ‘Lucas critique’ levelled against them, these models are still widely...

The conventional wisdom about Keynes’s Principle of Effective Demand is that it states something about quantities. It is widely held that the Principle determines the levels of output and employment in a world not governed by Say’s Law. This paper argues that the Principle of Effective...