Finn E. Kydland

Innovation, Capital Formation and Economic Policy

Category: Lectures

Date: 24 August 2017

Duration: 32 min

Quality: HD MD SD

Finn E. Kydland (2017) - Innovation, Capital Formation and Economic Policy

Abstract

In the long run, nations become more prosperous the fewer road blocks lie in the way of steadily higher productivity, along with productive capacity to take advantage of it. In large parts of the world today, however, the business environment is characterized by an extent of uncertainty that is unprecedented over the past decades. The main reason is lack of clarity in economic policy making. In order to be well founded, important growth-enhancing decisions, such as innovative activity, investment in productive capacity, choice of markets, and so on, require an assessment of the policy environment years into the future. Important policy dimensions are tax, spending, and debt policies, extent of trade restrictions, and the regulatory environment in general. The increase in policy uncertainty over the past decade was quite predictable. The talk will expound on fundamental reasons, illustrated by examples from parts of the world.