TY  - JOUR
AU  - Abel, Andrew B
AU  - Mankiw, N. Gregory
AU  - Summers, Lawrence H
AU  - Zeckhauser, Richard J
TI  - Assessing Dynamic Efficiency:  Theory and Evidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2097
PY  - 1986
Y2  - December 1986
DO  - 10.3386/w2097
UR  - http://www.nber.org/papers/w2097
L1  - http://www.nber.org/papers/w2097.pdf
N1  - Author contact info:
Andrew B. Abel
The Wharton School
University of Pennsylvania
2315 Steinberg Hall - Dietrich Hall
Philadelphia, PA  19104-6367
Tel: 215/898-4801
Fax: 215/573-7244
E-Mail: abel@wharton.upenn.edu

N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA  02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu

Lawrence H. Summers
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9322
Fax: 617/495-0436
E-Mail: lhs@harvard.edu

Richard J. Zeckhauser
John F. Kennedy School of Government
Harvard University
79 John F. Kennedy Street
Cambridge, MA  02138
Tel: 617/495-1174
Fax: 617/384-9340
E-Mail: richard_zeckhauser@harvard.edu
AB  - The issue of dynamic efficiency is central to analyses of capital accumulation and economic growth.  Yet the question of what operating characteristics of an economy subject to productivity shocks should be examined to determine whether or not it is efficient has not been resolved. This paper develops criterion based on observables for determining whether or not an economy is dynamically efficient. The criterion involves a comparison of the cash flows generated by capital with the volume of investment. Its application to the United States economy and the economies of other major OECD nations suggests that they are dynamically efficient.
ER  -