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Department of Professor: Rapach Summer 2009 ECON 312 Intermediate Macroeconomics Chapter Outline for “Chapter 8—Economic Growth II: Technology, Empirics, and Policy,” N. Gregory Mankiw, Macroeconomics, Sixth edition ( 8-1 Technological Progress in the Solow Model The Efficiency of Labor Y = F(K,L)
Y = F(K,L x E)
Efficiency of labor
Labor-augmenting technological progress
The Steady State With Technological Progress Delta k = s x f(k) – (delta + n + g) x k
See Figure 8-1
The Effect of Technological Progress See Table 8-1
According to the Solow model, only technological
progress can explain sustained growth and persistently rising living standards
c* = f(k*) – (delta + n + g) x k*
MPK = delta + n + g
MPK – delta = n + g 8-2 From Growth Theory to Growth Empirics Balanced Growth Convergence Factor Accumulation Versus Production Efficiency CASE STUDY: Is Free Trade Good for Economic Growth? 8-3 Policies to Promote Growth Evaluating the Rate of Saving Changing the Rate of Saving Allocating the Economy’s Investment Establishing the Right Institutions CASE STUDY: The Colonial Origins of Modern
Institutions
Encouraging Technological Progress CASE STUDY: The Worldwide Slowdown in Economic
Growth: 1972-1995
See Table 8-2
Measurement Problems
Oil Prices
Worker Quality
The Depletion of Ideas
CASE STUDY: Information Technology and the New
Economy: 1995-??? 8-4 Beyond the Solow Model: Endogenous Growth Theory The Basic Model Y = A x K
Delta K = s x Y – delta x K
Delta Y/Y = Delta K/K = s x A – delta
A Two-Sector Model Y = F[K,(1 – u) x L x E]
Delta E = g(u) x E
Delta K = s x Y – delta x K
The Microeconomics of Research and Development CASE STUDY: Economic Growth as a Process of Creative
Destruction 8-5 Conclusion Questions for Review: 1, 2, 5 Problems and Applications: 4, 5 |
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