Growth Begets Growth: Reflections on Total Factor Productivity

In my last post, I argued that it would be socially beneficial to adopt policies that would lead the US economy to grow at 4-5 percent per year over the next four years (about 2.5 percent per year faster than current projections).   My argument focused on the benefits of increasing output in 2020 by increasing the rate of growth of capital and labor.   My analysis took the path of total factor productivity (the amount of output generated by a given level of capital and labor) as given.  In this post, I consider the possibility that super-normal aggregate demand…