Trillions Gained and Lost: Estimating the Magnitude of Growth Episodes

Lant Pritchett, Kunal Sen, Sabyasachi Kar, Selim Raihan

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An increasingly large literature in the empirics of growth has viewed economic growth as an ‘episodic phenomena’.
We propose a new technique for measuring the total magnitude of a growth episode: the change in output
per capita resulting fromone structural break in the trend growth of output (acceleration or deceleration) to the
next. Our method allows us to quantify the amount of income gain and loss during growth accelerations and growth decelerations. We show that the income gains and losses are staggering in magnitude, often multiples of the level of income at the start of the growth episode. The top 20 growth accelerations have a net present value (NPV) magnitude of 30 trillion dollars—twice the US GDP. The top 20 growth decelerations account for 35 trillion dollars less in NPV of output.What explains such ‘staggering’ gains and losses in income over relatively
short periods is the key question that future research on economic growth should try and address.
Original languageEnglish
Pages (from-to)279-291
Number of pages13
JournalEconomic Modelling
Early online date12 Mar 2016
Publication statusPublished - 2016

Research Beacons, Institutes and Platforms

  • Global Development Institute


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