The nation's economic growth can be boosted from the current 2.2 percent to 3 percent by the year 2000 without runaway inflation, a major manufacturing trade group said Wed-nes-day.
The conventional view is wrong, said economist Jerry Jasinowski, author of a study released Wed-nes-day by the National Association of Manufacturers. Non-inflationary, higher growth is possible due to technological advances and structurally lower inflation is possible due to increased international competition and domestic deregulation, said Jasinowski, president of the manufacturers group."This paper argues that this (conventional) view does not take into account changes that are creating a new economy," he said. "As a result of technological advances and greater capital investment, the growth rate could rise to 2.8 percent."
The study "The Case for Higher Growth," notes many economists including those at the Federal Reserve and on Wall Street generally believe the economy can grow no more than 2.3 percent annually without overheating.
The conventional wisdom is based on notions that anything more "will only feed inflation and bring about the sort of economic volatility that characterized the late 1970s and early 1980s," when consumer prices were rising by double-digit figures, the study said.
Jasinowski urged the nation to set an interim goal of 3 percent growth by the year 2000 and to "explore the types of long-term structural changes that can eventually achieve a growth rate approaching 3.5 percent."
To reach 3 percent, he contends, monetary policy must be loosened to permit lower interest rates - 25 basis points in 1996 and an additional 25 basis points later on. A basis point is one 100th of a percentage point.