Shocks, Crises, and False Alarms

CHAPTER 6 The Enduring Appeal of Magical Growth Models

Defeatist narratives about US long-term growth prospects are misguided, we argued in the last chapter, as even mature economies can reaccelerate under the right conditions. We return to such credible prospects in chapters 7 and 8. But there is also a relative version of defeatism, the idea that the US economy is falling behind those with a superior growth model. In reality, as we shall see, no economy escapes the gravity of growth. Advantageous growth differentials reliably shrink as emerging economies approach the frontier.¹ But the fear (and envy) of supposedly superior growth models is curiously enduring.

Executives care about relative growth across economies for the same reasons ...