Stimulating growth and welfare in the U.S

James Richard Malley and Apostolis Philippopoulos

Macroeconomic Dynamics, 2026, vol. 30, -

Abstract: This paper examines how structural reforms can boost long-term growth and welfare in the U.S. economy. Using a model calibrated to historical data, we compare three reforms: reducing regulatory costs, increasing public investment, and eliminating rent-seeking. Our results show that all three improve welfare, but through different channels. Cutting regulatory burdens delivers quick efficiency gains with minimal adjustment costs. Raising public investment has the most substantial impact on growth and welfare, though it requires short-term trade-offs. Eliminating rent-seeking improves efficiency and leisure, but its growth effect is smaller. Overall, public investment emerges as the most powerful lever for growth, while regulatory simplification and institutional reform provide complementary benefits by reducing distortions, improving resource allocation, and reinforcing the efficiency gains from fiscal policy.

Date: 2026
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