The chapters in this volume provide insightful and provocative discussion of many of the issues related to whether the United States is likely to continue on the robust growth path of earlier years or whether economic growth is likely to decelerate or even enter an extended period of “secular stagnation.” In this concluding chapter, the editors of the volume tie together some of the threads that appear in the various chapters, extend the analyses in several directions, and discuss some policy implications. The discussion is organized around three themes: (i) technology and productivity growth; (ii) labor markets and economic growth, including the importance of human capital accumulation and the role of immigration; and (iii) fiscal policy, including both expenditure and tax reform.

Public expenditure reforms over past decades have reinvigorated states and economies in many countries. A first group of countries already started to reform their public expenditure in the early to mid-1980s, as the negative side effects of high spending, taxes and deficits grew. A second group of reformers followed in the early to mid-1990s. These countries reduced public expenditure significantly as part of comprehensive reform agendas. Reforms focussed on consumption expenditure and the welfare state, and improved economic structures and institutional frameworks. This strengthened public finances, growth and employment. Only a few countries did not reform, and their public expenditure continued to rise strongly. In the 2010s, a third group of countries in Europe started to reform in the context of the global financial crisis. These countries also curtailed expenditure significantly and undertook institutional reform to the benefit of fiscal sustainability, growth and employment.

How ‘big’ should government be? How much lower can public spending be, if countries still want to be amongst the better or even best performers? A pragmatic ‘optimum’ for the size of government, something that is realistic and reachable, is normally not more than 30–35% or perhaps 40% of GDP. This is the spending ratio of top-scoring countries, such as Switzerland and Australia, and they do well on their core tasks. Ireland and Singapore do so with even lower spending. This implies a lot of room for expenditure savings in many countries, given a total average of almost 44% and highest spending above 56% of GDP. ‘Big spenders’ with a poor performance and an uneven income distribution can gain in particular from cutting the size of the state. There is also a group of countries, with high spending and good performance, such as the Nordic countries. For these, the picture for the optimal size of government is nuanced. Experience nonetheless shows that comprehensive reform can make a big difference to performance and efficiency everywhere.