Increase the ratio of capital spending to gdp

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Question: The investment tax credit was designed to increase the ratio of capital spending to GDP and hence boost productivity growth. The credit was introduced in 1962, and although it was temporarily suspended in 1966 and again in 1969, was gradually expanded and kept in place until 1986, when it was terminated. In the decade before its introduction, productivity rose 2.6% per year. During its first decade, productivity growth increased to 2.9% per year, but during the remaining years it was in place, productivity fell to 1.5% per year. After it was disbanded, productivity growth rose slightly to 1.7% per year. Based on these figures, do you think the ITC accomplished its stated objectives? What other data would be necessary for you to make an informed judgment?

Reference no: EM131737810

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