Macroeconomics

metrica 60 (1992): 323–351.

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8-5

Conclusion

Long-run economic growth is the single most important determinant of the

economic well-being of a nation’s citizens. Everything else that macroeconomists

study—unemployment, inflation, trade deficits, and so on—pales in comparison.

Fortunately, economists know quite a lot about the forces that govern eco-

nomic growth. The Solow growth model and the more recent endogenous

growth models show how saving, population growth, and technological progress

interact in determining the level and growth of a nation’s standard of living.

These theories offer no magic recipe to ensure an economy achieves rapid

growth, but they give much insight, and they provide the intellectual framework

for much of the debate over public policy aimed at promoting long-run eco-

nomic growth.