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Department of Professor: Rapach Spring 2010 ECON 312 Intermediate Macroeconomics Chapter Outline for “Chapter 7—Economic Growth I: Capital Accumulation and Population Growth,” N. Gregory Mankiw, Macroeconomics, Seventh edition ( See Table 7-1 7-1 The Accumulation of Capital The Supply and Demand for Goods The Supply of Goods and the Production Function Y = F(K,L) z × Y = F(z × K,z × L) Y/L = F(K/L,1) y = f(k) MPK = f(k+1) – f(k) See Figure 7-1 The Demand for Goods and the Production Function y = c + i c = (1 – s) × y y = (1 – s) × y + i i = s × y Growth in the Capital Stock and the Steady State i = s × f(k) See Figure 7-2 See Figure 7-3 Delta k = i – delta × k Delta k = s × f(k) – delta × k See Figure 7-4 Steady-state level of capital = k* Approaching the Steady State: A Numerical Example Y = K0.5 × L0.5 Y/L = (K0.5 × L0.5)/L y = k0.5 s = 0.3, delta = 0.10, k0 = 4 See Table 7-2 Delta k = s × f(k) – delta × k 0 = s × f(k*) – delta × k* k*/f(k*) = s/delta k*/(k*)0.5 = 0.3/0.1 k* = 9 CASE STUDY: The Miracle of Japanese and German
Growth How Saving Affects Growth See Figure 7-5 If the saving rate is high, the economy will
have a large capital stock and a high level of output. If the saving rate is
low, the economy will have a small capital stock and a low level of output CASE STUDY: Saving and Investment Around the World
See Figure 7-6 7-2 The Golden Rule Level of Capital Comparing Steady States Golden Rule level of capital
y = c + i c = y – i c* = f(k*) – delta × k* See Figure 7-7 MPK = delta See Figure 7-8 Finding the Golden Rule Steady State: A Numerical Example y = k0.5 k*/f(k*) = s/delta k*/(k*)0.5 = s/0.1 k* = 100 × s2 See Table 7-3 The Transition to the Golden Rule Steady State Starting With Too Much Capital See Figure 7-9 Starting With Too Little Capital See Figure 7-10
When the economy begins above the Golden Rule,
reaching the Golden Rule produces higher consumption at all point in time. When
the economy begins below the Golden Rule, reaching the Golden Rule requires
initially reducing consumption to increase consumption in the future. 7-3 Population Growth The Steady State With Population Growth Delta k = i – (delta + n) × k Delta k = s × f(k) – (delta + n) × k See Figure 7-11 The Effects of Population Growth See Figure 7-12 Golden Rule: MPK = delta + n CASE STUDY: Population Growth Around the World See Figure 7-13 Alternative Perspectives on Population Growth The Malthusian Model The Kremerian Model 7-4 Conclusion Questions for Review: 1, 4 Problems and Applications: 1, 2, 4 |
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Disclaimer: pages.slu.edu is a service of Saint Louis University, Saint Louis University does not control, monitor or guarantee the information contained in these sites. For more information » |