Word: dry
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Dates: during 1980-1980
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...Data Resources, Inc. (DRI) model has been used to predict the prospects for the U.S. economy if present policies are little changed but there is a modest tax reform in 1981 reducing personal and corporate taxes. It is not a worst-case model, rather just a trend projection. For 1980-85 it sees GNP growth at 2.7%, productivity growth at 1.4%, core inflation up as actual inflation (CPI) drops, and long-term interest rates at 10.34%--all figures worse than the traditional performance level of the U.S. economy...
Consider a 3% increase in the effective tax credit and a two year cut in the average tax lifetime of producers' plant and equipment. The DRI model suggests such measures would give a considerable stimulus to investment. By 1985, compared with the baseline case, capital stock would be up 3.1%, level of potential GNP up 2%, productivity up 2.4%, and core inflation improved by 0.8%. This is obviously not the entire solution, but it makes a dent...