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Lecture notes Macroeconomics CHAPTER 9 Population Growth and Technological Progress ISBN: 9781319263904 £6.89
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Lecture notes Macroeconomics CHAPTER 9 Population Growth and Technological Progress ISBN: 9781319263904
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-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...

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  • January 31, 2023
  • 11
  • 2022/2023
  • Lecture notes
  • N. gregory mankiw
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MACROECONOMICS CHAPTER 9

Population Growth and Technological Progress


Population Growth in the Solow Model The Solow Model Shows:
● To explain the sustained economic growth that
we observe in most parts of the world, Capital
accumulation by itself is not enough
● We must incorporate the other two sources of
growth:
○ population growth
○ technological progress

Population Growth: Mathematically:
● We now suppose that the population and the
labor force grow at a constant rate n.

The Steady State with Population Growth How does population growth affect the steady
state?
● AKA, how does it affect the accumulation of
capital per worker
● Answer→ The growth in the number of
workers causes capital per worker to fall.
● It reduces k by spreading the capital stock more
thinly among a larger population of workers
○ Similar to how Depreciation reduces k by
wearing out the capital stock

Mathematically:
● The change in the capital stock per worker is
○ Δ k=i−(δ +n)k
● Reasoning:
○ Investment increases k
○ Depreciation and population growth
decrease k.

Break-even investment:
● (δ +n)k
● It’s the amount of investment necessary to keep
the capital stock per worker constant
○ Δ k=0 when capital stock pw is constant
● Includes the amount needed to
○ Replace depreciating capital (δ k )
○ Provide new workers with capital (nk ¿.

Analysis with population growth:
● Substitute sf(k) for i→ Δ k=sf (k)−( δ+n)k

Graph:
¿ ¿ ¿
● In a steady state k*, Δ k=0 , so i =δ k +n k

, MACROECONOMICS CHAPTER 9

Population Growth and Technological Progress




The Effects of Population Growth It Alters the Solow Model in 3 Ways: Reason 1
● It brings us closer to explaining sustained
economic growth
○ In the steady state, because the number
of workers is growing at rate n, total
capital and total output must also be
growing at rate n.

Reason 2:
● Helps further explain why some countries are
rich and others are poor
○ An increase in the rate of population
growth reduces the steady-state level of
capital per worker
○ k* is lower and y*=f(k*) so y* is lower
○ Countries with higher population growth
will have lower levels of GDP per worker.
● Note→ a change in the population growth
rate, like a change in the saving rate, has
a level effect on income per worker but
does not affect the steady-state growth
rate of income per worker.
● Graph

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