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Uncertainty in forecasts of long-run economic growth

P. Christensen (), Kenneth Gillingham () and W. Nordhaus
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P. Christensen: Department of Agricultural and Consumer Economics, University of Illinois at Urbana–Champaign, Urbana, IL 61801
W. Nordhaus: Department of Economics, Yale University, New Haven, CT 06511

The National Academy of Sciences, 2018, vol. 115, issue 21, 5409-5414

Abstract: Forecasts of long-run economic growth are critical inputs into policy decisions being made today on the economy and the environment. Despite its importance, there is a sparse literature on long-run forecasts of economic growth and the uncertainty in such forecasts. This study presents comprehensive probabilistic long-run projections of global and regional per-capita economic growth rates, comparing estimates from an expert survey and a low-frequency econometric approach. Our primary results suggest a median 2010–2100 global growth rate in per-capita gross domestic product of 2.1% per year, with a standard deviation (SD) of 1.1 percentage points, indicating substantially higher uncertainty than is implied in existing forecasts. The larger range of growth rates implies a greater likelihood of extreme climate change outcomes than is currently assumed and has important implications for social insurance programs in the United States.

Keywords: economic productivity; long-run growth; forecast uncertainty; climate change; greenhouse gas emissions (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:nas:journl:v:115:y:2018:p:5409-5414