We examine impacts on the expansion of the supply
side of the economy and of potential Gross Domestic
Product (GDP). This expansion could be an increase in the
annual growth rate, a one-time increase in the size of the
economy that does not affect the future growth rate but
puts the economy on a higher growth path, or both. Our
focus on the supply side of the economy and the long
run is in contrast to the short-term phenomenon, also
called “economic growth,” by which a boost in aggregate
demand, in a slack economy, can raise GDP and help align
actual GDP with potential GDP.