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| | Slate - The Dismal Science - Dec. 18, 1997 |
 | | It is based on the real-life observation that when the output of the U.S. economy--as measured by real gross domestic product--is growing rapidly, the unemployment rate falls; when the output is growing slowly or is shrinking, the unemployment rate rises. |
 | | That means that while the economy can grow faster than 2-point-whatever percent for a while if it starts from a high rate of unemployment (like the 7.5-percent unemployment rate that prevailed in late 1992), in the long run, that growth rate cannot remain higher than the rate that keeps unemployment constant. |
 | | Behind that speed limit, in turn, lies another bit of arithmetic: The rate of growth of output, by definition, is the sum of the rate of growth of employment (which is limited by the size of the potential labor force) and that of productivity, a k a output per worker. |
| web.mit.edu /krugman/www/speed.html (1612 words) |
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