EconPapers    
Economics at your fingertips  
 

Trillions Gained and Lost: Estimating the Magnitude of Growth Episodes

Lant Pritchett (), Kunal Sen (), Sabyasachi Kar and Selim Raihan ()

No 279, CID Working Papers from Center for International Development at Harvard University

Abstract: We propose and implement a new technique for measuring the total magnitude of a growth episode: the change in output per capita resulting from one structural break in the trend growth of output (acceleration or deceleration) to the next. The magnitude of the gain or loss from a growth episode combines (a) the difference between the post-break growth rate versus a counter-factual "no break" growth rate and (b) the duration of the episode to estimate the difference in output per capita at the end of an episode relative to what it would have been in the "no break" scenario. We use three "counter-factual" growth rates that allow for differing degrees of regression to global average growth: "no change" (zero regression to the mean), "world episode average" (full regression to the mean) and "unconditional predicted growth" (which uses a regression for each growth episode to predict future growth based only on past growth and episode initial level). We can also calculate the net present value at the start of an episode of the gain or loss in output comparing the actual evolution of output per capita versus a counter-factual. This method allows us to place dollar figures on growth episodes. The top 20 growth accelerations have Net Present Value (NPV) magnitude of 30 trillion dollars - twice US GDP. Conversely, the collapse in output in Iran between 1976 and 1988 produced an NPV loss of $143,000 per person. The top 20 growth decelerations account for 35 trillion less in NPV of output. Paraphrasing Lucas, once one begins to think about what determines growth events that cause the appearance or disappearance of output value equal to the total US economy, it is hard to think about anything else.

Keywords: Growth Magnitude; Growth Episode; Acceleration; Deceleration; Net Present Value (search for similar items in EconPapers)
JEL-codes: C18 O11 O47 (search for similar items in EconPapers)
Date: 2014-03
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.hks.harvard.edu/sites/default/files/ce ... tchett_trillions.pdf (application/pdf)

Related works:
Journal Article: Trillions gained and lost: Estimating the magnitude of growth episodes (2016) Downloads
Working Paper: Trillions Gained and Lost: Estimating the Magnitude of Growth Episodes (2014) Downloads
Working Paper: Trillions gained and lost. Estimating the magnitude of growth episodes (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cid:wpfacu:279

Access Statistics for this paper

More papers in CID Working Papers from Center for International Development at Harvard University 79 John F. Kennedy Street. Contact information at EDIRC.
Bibliographic data for series maintained by Chuck McKenney ().

 
Page updated 2022-09-24
Handle: RePEc:cid:wpfacu:279