The United States Economy Performance and Issues

612 Pages·1999·18.301 MB·English

by  Yusuke Horiguchi

The United States Economy
Performance and Issues
By a Staff Team Headed by
Yusuke Horiguchi
Charles Adams Sharmini Coorey
Krister Andersson Robert Corker
A. Lans Bovenberg Liam P. Ebrill
Bankim Chadha Owen Evans
Daniel Citrin Steven M. Fries
David T. Coe Lloyd Kenward
Ellen M. Nedde
International Monetary Fund
1992
© 1992 International Monetary Fund
Library of Congress Cataloging-in-Publication Data
The United States economy: performance and issues I by a staff team
headed by Yusuke Horiguchi.
p. em.
ISBN 1-55775-231-1
I. United States-Economic policy-1981- 2. United States
Economic conditions-1981- I. Horiguchi, Yusuke.
II. International Monetary Fund.
HC!06.8.U548 1992
338.973--dc20 92-16898
CIP
This book's cover and its interior
were designed by the IMF Graphics Section.
Esha Ray of the IMF's External Relations Department
edited the book for publication.
Price: US$35.00
Please send orders to:
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Preface
This volume brings together technical papers prepared by the IMF
staff for the Article IV consultations with the United States over the
period 1988-90. The papers focused on key issues for U.S. economic
policy in recent years and examined measures that might be expected to
improve the prospects for growth over the medium term. The issues
analyzed include macroeconomic questions related to fiscal and
monetary policies, the current account, national saving, and exchange
rates, as well as microeconomic topics such as the performance of the
U.S. health care sector and the ramifications of U.S. tax and public
expenditure structures.
The North American Division of the IMF's Western Hemisphere De
partment was primarily responsible for the preparation of the papers but
staff members of the Research and Fiscal Affairs Departments also made
contributions. The authors are Liam Ebrill, Owen Evans, Charles
Adams, Daniel Citrin, Lloyd Kenward, Robert Corker, Lans Bovenberg,
Steven Fries, Sharmini Coorey, Krister Andersson, Bankim Chadha, and
Ellen Nedde. The papers were prepared under the direction of Yusuke
Horiguchi, at that time Assistant Director in the Western Hemisphere
Department. The papers have benefited from discussions with U.S.
officials and other staff members; however, the views expressed are those
of the authors alone. Although time has elapsed since these papers were
prepared, it was decided not to update them on the grounds that in their
original form they would convey better the context in which they were
written and the issues were discussed.
S. T. Beza
Counsellor and Director
IMF Western Hemisphere Department
iii

Contents
Page
Preface iii
Chapte1r.O verview
YusukHeo rigucLhiia,mP .E brilaln,dC harlAedsa ms 1
PARTI .N ATIONALS AVINGSA ND PUBUC POUCY
Chapte2r.N ationaanld P ersonSaalv inMge:a surement
andA nalysoifsR ecenTtr ends
A.L ansB ovenbearngd O wenE vans 19
Chapte3r.T axP oliacny dN ationSaalv inAg :S urvey
A.L ansB ovenberg 52
Chapte4r.N ationSaalv inagnsd T argeftosrt heF ederal
BudgeBta lance
OwenE vans 77
Chapte5r.S ociSaelc uriDteym,o graphTirce nds,
andt heF ederBauld get
LiamP .E brill 116
Chapte6r.S omeM icroeconomoifFc iss cDaelf icit
ReductioTnhse:C aseo fT axE xpenditures
LiamP .E brill 143
Chapte7r.I nvestmiennH to usinAg :P ortfolio
ApproacthoE ffecotfsC hangeisnT axP olicy
KristAenrd ersson 170
Chapte8r.F iscaanld E conomiIcm pacotf F ederal
CrediPtr ograms
StevMe.n Fries 192
v
vi• Contents
PARTII . OTHERD OMESTICM ACROECONOMICI SSUES
AND MEDIUM-TERMO UTWOK
Chapte9r.T axP oliacnyd B usineIsnsv estment:
Evidenfcreo mt he1 980s
RoberCto rkeOrw,e nE vansa,n dL loyKde nward 221
Chapte1r0 .A System's ApptrooE ascthi mating the
NaturRaalt eo fU nemploymeanntd P otential
Outpufto rt heU niteSdt ates
CharlAedsa msa ndD aviTd. C oe 252
Chapte1r1 .T heD eterminaonftU s. S.R ealI ntereRsatt es
int heL ongR un
SharmiCnoio rey 314
PARTI ll.M ONETARYA ND FINANCIAILS SUES
Chapte1r2 .B roadM oneyG rowtahn dI nflation
LiamP .E brialnld S tevMe.n Fries 357
Chapte1r3 .A n ExpensiTvher iIfntd ustry
StevMe.n Fries 373
PARTIV.CURRENATCCOUNTADJUSTMENT
AND THE EXCHANGER ATE
Chapte1r4 .A DynamiEcr ror-CorreMcotdieolon f t he
U.S.C urrent Account
ElleMn. Nedde 399
Chapte1r5 .T heR ecenBte havioofrU .S.Tr adeP rices
DanieCli trin 445
Chapte1r6 .S tructuMroadle losf t heD ollar
CharlAedsa msa ndB ankiCmh adha 461
Contentsv ii
•
PARTV .S TRUCTURALIS SUES
Chapte1r7 .T heU .S.H ealtCha reI ndustry:
PerformaanncdeI ssues
LiamP .E brill 499
Chapte1r8 .I mplicatoifoI nnst egraUt.iSn.gC orporate
andI ndividIunaclo mTea xes
KristAenrd ersson 531
Chapte1r9 .D evelopmeinntF se deral-State-Local
Fiscal RelIamtpiloincsa:t fioorIn nsf rastructure
InvestmaenndtE ducation
LiamP .E brill 574
Ins tatismtaitctaeltr h roughtohuitbs o ok,
dot(s. .).i ndictahtaedt a taar en ota vailaab dlaes;( h-) indicattheastt h ef igure
isz eroo rl estsh anh altfh ef inadli gsihto wno,r t hatth ei temd oesn ote xist
"billimoena"n sa thousamnidl liaonnd," trillmieoann"sa thousabnidl lion
as hordta s(h- )i su sebde tweeyne arosrm onth(sf oerx ampl1e9,8 9-o9r0J anuary­
Octobetro)i ndicaat teo taolft hey earosr m onthisn clusoiftv hee b eginnianngd
endinyge arosr m onths
as tro(k/e)i su sebde tweeyne a(rfso erx ampl1e9,9 0/9t1oi) n dicaa fties cyaela orr
a cropy ear
a colo(n: )i su sedb etweean y eaarn dt hen umbeirn dicatai qnuga rtweirt htihna t
yea(rf ore xampl1e9,9 :12 )
componenotfst ablmeasy n ota ddt ot otaslhso wnb ecausofer ounding.