Oil and Economic Performance in Industrial Countries

William D. Nordhaus

WDN

William D. Nordhaus

Discussants: Hendrik S. Houthakker and

HSH

Hendrik S. Houthakker

Jeffrey D. Sachs

JDS

Jeffrey D. Sachs

WITH HINDSIGHT, 1973 marks a turning point of the postwar period, both for the energy market and for overall economic performance. That year ended the great postwar expansion-a period of rapid economic growth, declining unemployment, and a dramatic increase in living standards, all in the context of moderate inflation and economic integration. As measured by real GNP, overall economic growth in the seven largest countries of the Organisation for Economic Co-operation and Development slowed from 5.3 percent annually in 1963-73 to 2.7 percent in 1973-79, while consumer price inflation rose from 3.6 percent annually to 9.3 percent for the same two periods. The most significant development from the standpoint of overall economic performance has been the decline in productivity growth from 3.9 percent annually in 1963-73 to 1.7 percent in 1973-79.