SOLOW AND THE STATES - CAPITAL ACCUMULATION, PRODUCTIVITY, AND ECONOMIC-GROWTH

National, state, and local policymakers have increasingly focused thei r attention on policies toward economic growth, especially efforts to raise the rate of investment. Recent studies of economic growth have r aised a debate over the role played by the investment rate in the long -run performance of the economy and, thus, over the impact of tax and other policies to alter investment incentives. Evidence from the state s suggests that the effects of capital accumulation on growth are cons istent with the predictions of the neoclassical growth model. At the s ame time, the estimates indicate a substantial role for human capital as well in raising productivity. Also, even in the context of a neocla ssical growth model, changes in the rate of investment have a sustaine d impact on the pace of economic growth.