BillW%SRI-KL@sri-unix.UUCP (04/04/84)
From: William "Chops" Westfield <BillW @ SRI-KL> I just cleaned up my office, and I found a copy of this report prepared for NASA under contract # NASW-2741 by Michael K Evans, Chase Econometric associates, inc, Bala Cynwyd, PA... Ill send out a limited number (say 10) of the paper to people who wish to read the whole thing (this is the "executive summary", about 10 pages), or you might be able to get it from NASA or Chase. : : "Significance of findings : NASA R&D spending increases the rate of technological change and reduces thhr rate of inflation for two reasons [previous comments state that ANY gvnt spending increases jobs, economic stimulation, etc, but at the expense of causing inflation - wew]. First, in the short run, it redistributes demand in thye direction of high technology industries, thus improving aggregate productivity in th economy. As a result, NASA R&D spending tends to be more stabilizing in a recovery period than general government spending. "Second, in the long run, it expands the production possiblity fronteir of the economy by increasing the rate of technological progress. This improves labor productivity further, which results in lower unit labor costs, and hence lower prices. A slower rate of inflation leads in turn to a more rapid rise in real disposbale income permitting consumers to purchase the additional goods and services being produced and generating greater employment. "In assesing these results, we once again stress the importance of distinguishing between demand and supply effects. A $1e9 increase in NASA spnding will have an immediate effect on real GNP, raising it approximately $2.1e9 the first year and $2.5e9 the next year.... " The report is dated April, 1976. Bill Westfield