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OECD Economic Surveys: United States 2007

image of OECD Economic Surveys: United States 2007
This edition of OECD's periodic survey of the US economy assesses recent economic developments and examines challenges the US faces including employment limits that are slowing economic growth, fiscal sustainability, household debt, improving primary and secondary education, and financing higher education. This book includes StatLinks, URLs under tables and graphs linking to Excel® spreadsheet files containing the underlying data.

"Has an international bureaucracy ever made so much sense in so few words? If so, I missed it."-Greg Mankiw

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Challenges facing the US economy

Economic performance has improved considerably in the past decade or so. This is most manifest in the marked acceleration in productivity, the major determinant of standards of living. More recently, economic growth has remained fairly solid despite a sharp housing market correction, and prospects are good for continued expansion, although capacity pressures pose some inflationary risks. Nonetheless, there are a number of longer-term challenges facing the economy. Potential growth is slowing as demographic changes weigh on labour supply while there are considerable public spending pressures as the population ages. It is therefore all the more important to pursue policies that are conducive to further efficiency gains. Together with entitlement reform, this would facilitate putting government finances on a sustainable footing. Tax reform is also essential, both for efficiency reasons and better targeting those in need. In particular, it would be desirable to reduce the distorting and poorly targeted tax concessions in the housing market. Finally, improvements in the education system, which produces mixed results, are important to long-run productivity growth and competitiveness.

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