American Economic Policy in the 1990s – 1

Peter Orszag American Economic Policy in the 1990sAmerican Economic Policy in the 1990s by Jeffrey Frankel and Peter Orszag is a first history of American economic policy in the 1990s.  Each chapter is devoted to an area of economic policity and consists of a background paper written by leading academic economists together with short essays by prominent policymakers.  You can purchase the book via Amazon.

From the book…

Decades seem to take on characteristics.  The 1970s make us think of oil shocks and Watergate, and the 1980s of supply-side economics and the end of the cold war.  How will historians – or economic historians, at any rate, remember the 1990s?

It is not too soon to predict.  The New Economy and Greenspan.  The Internet, dot coms, and IPOs.  The cell phone and the Palm Pilot.  Policy-wonk slogans, some carefully planned and some unplanned: “The Economy, Stupid”; “The era of big government is over”; and “Save Social Security First.”  The Contract with America and the Gingrich revolution.  NAFTA and the “giant sucking sound.”  The Asian crisis.  Tobacco litigation and the Microsoft trial.

The two Clinton terms occupied most of the 1990s.  Unquestionably, history will remember this period as a time of economic accomplishment.  Between 1993 and 2000 the United States exhibited the best economic performance of the past three decades.  In 2000 the US economic expansion surpassed in length Clinton’s second term, real economic growth averaged 4.5 percent per year, and unemployment fell to 4 percent, the level that had been specified as the goal of national policy by the Humphrey-Hawkins legislation three decades earlier.  During the early 1990s economists would have considered these outcomes wildly unattainable.

Strong growth and low unemployment were particularly remarkable because they were accompanied by structural budget surpluses and low inflation.  Long expansions have historically been fueled in large part by expansionary fiscal or monetary policies, with the result that, by their six-year mark, debt ratios and inflation rates had risen to high levels, sowing the seeds of a subsequent contraction.  Furthermore, productivity growth typically slows as an expansion matures.  The 1990s American boom, to the contrary, was led by private-sector spending and private-sector employment.  And for the first time in three decades, productivity growth rose substantially in the late 1990s, despite the length of the expansion at that point.  The cause of this acceleration in productivity is still the subject of debate.  (Section III of this introduction briefly catalogs the factors that are likely to have contributed to the strong performance of the US economy during the 1990s.

from Author Peter Orszag


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s