100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Lecture notes Macroeconomics CHAPTER 10 Growth Empirics and Policy, ISBN: 9781319263904 £7.99   Add to cart

Lecture notes

Lecture notes Macroeconomics CHAPTER 10 Growth Empirics and Policy, ISBN: 9781319263904

 6 views  0 purchase

-Individual Lecture notes for each of the specified Economics book chapters. -Written in flashcard style, some in colour scheme for easier memorisation. -Everything from each chapter was included, for assurance that all material is covered. -Graphs also included in the form of screen-grabs fr...

[Show more]

Preview 2 out of 12  pages

  • January 31, 2023
  • 12
  • 2022/2023
  • Lecture notes
  • Mankiw, n. gregory
  • All classes
book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:
All documents for this subject (10)
avatar-seller
AKrasha
MACROECONOMICS CHAPTER 10

Growth Empirics and Policy


Growth accounting The purpose of growth accounting:
● To decompose the observed growth in output into
○ growth in capital,
○ growth in labor
○ advances in technology.
● It provides a way to measure the pace of
technological progress.

From Growth Theory to Growth Empirics When the Solow growth model is forced to confront the
facts.

Balanced Growth Balanced growth:
● When the values of many variables rise together
in the steady state due to Technological progress

Variables Y/L and K/L:
● According to the Solow model, Y/L and K/L grow
at g (rate of technological progress) in the steady
state.
○ U.S. data for the past half century show
that the capital–output ratio has remained
approximately constant over time.

Variable of Factor Prices:
● Technological progress also affects factor prices
● In the steady state, the real wage grows at the
rate of technological progress.
● The real rental price of capital, however, is
constant over time

Convergence Convergence:
● A process of catch-up
○ Economies that start off poor → grow
faster than economies that start off
rich
○ Result → poor economies catch up
with the rich economies
● If convergence does not occur
○ Countries that start off behind are likely to
remain poor.

The Solow Model on Convergence:
● Predicts when convergence should occur.
● It depends on why they differ in the first place.
● If two economies start off with different capital
stocks but the same steady state
○ expect the two economies to converge;
● If two economies have different steady states
○ Don’t expect convergence
○ (perhaps because of different rates of

, MACROECONOMICS CHAPTER 10

Growth Empirics and Policy
saving or population growth)

Convergence in International Data:
● If examine only data on income per person
○ Little evidence of convergence
○ Countries that start off poor do not grow
faster on average than countries that start
off rich.
○ This suggests that different countries have
different steady states
● If statistical techniques are used to control for
some of the determinants of the steady state
○ such as saving rates, population growth
rates, and accumulation of human capital
(education)
○ Then the data show convergence at a rate
of about 2% per year.
● Conclusion:
○ The economies of the world exhibit
conditional convergence
○ They appear to be converging to their own
steady states, which in turn are
determined by variables such as the rates
of investment, population growth, and
human-capital accumulation.

Factor Accumulation Versus Production Efficiency International differences in income per person can
be attributed to:
● Differences in the factors of production
○ Such as the quantities of physical and
human capital
● Differences in the efficiency with which
economies use their factors of production
○ A worker in a poor country may be poor
because the tools and skills he has are
not being put to their best use.

In terms of the Solow model:
● Is the large gap between rich and poor nations is
explained by:
○ Differences in capital accumulation
(including human capital)
○ OR
○ Differences in the production function?

Factor Accumulation VS Production Efficiency:
● Research shows both are important
● A common finding→they are positively
correlated
○ Nations with high levels of physical and
human capital also tend to use those
factors more efficiently

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller AKrasha. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £7.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

79271 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£7.99
  • (0)
  Add to cart