INTRODUCTION TO ECONOMIC GROWTH. Dongpeng Liu Department of Economics Nanjing University
|
|
- Caren Bond
- 5 years ago
- Views:
Transcription
1 INTRODUCTION TO ECONOMIC GROWTH Dongpeng Liu Department of Economics Nanjing University
2 ROADMAP INCOME EXPENDITURE LIQUIDITY PREFERENCE IS CURVE LM CURVE SHORT-RUN IS-LM MODEL AGGREGATE DEMAND AGGREGATE SUPPLY INTERMEDIATE-RUN AS-AD MODEL SOLOW MODEL LONG-RUN w/ CAPITAL ACCUMULATION LONG-RUN AS-AD MODEL LONG-RUN w/o CAPITAL ACCUMULATION LABOR MARKET PHILLIPS CURVE MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 2
3 ECONOMIC GROWTH In previous lectures, we have not considered economic growth In the short-run and intermediate-run, the economy fluctuates around the natural level of output In the long-run, the economy returns to its long-run equilibrium (natural rate of unemployment and natural output) As long as the natural rate of unemployment rate remains unchanged, the long-run equilibrium stays the same We can reach this conclusion because we have not considered capital accumulation, population growth and technological progress In the following lectures, we are going to consider how capital accumulation, population growth and technological progress may affect long-run economic outcomes MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 3
4 ECONOMIC GROWTH Economic growth is the steady increase in aggregate output over time. Economic growth is a long-run trend Cyclical fluctuations are temporary deviations from this longrun trend MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 4
5 ECONOMIC GROWTH MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 5
6 DEFINITIONS Output per capita equals GDP divided by population The standard of living depends on the evolution of output per capita, not total output To compare GDP across countries, we use a common set of prices for all countries. Adjusted real GDP numbers are measures of purchasing power across countries, also called purchasing power parity (PPP) numbers. If a Big Mac costs a customer 24 yuan in China and the exchange rate is 6yuan/USD, then USD denominated Chinese GDP will increase by $4 when the Big Mac is sold If the same Big Mac costs $5 in the USA, then the incremental PPP adjusted Chinese GDP is $5 when a Big Mac is sold. MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 6
7 PURCHASING POWER PARITY The straightforward method of taking a country s GDP expressed in that country s currency, and then using the current exchange rate to express it in terms of dollars does not always work for two reasons 1. Exchange rates can vary a lot. 2. In general, the lower a country s output per capita, the lower the prices of non-tradable goods and thus the general price level. Calculating the USD denominated GDP by directly applying the exchange rate will under estimate the output of less developed countries. MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 7
8 ECONOMIC GROWTH IN DEVELOPED COUNTRIES Average Annual Growth Rate of Real Output Per Capita Real Output Per Capita (1996 Dollars) /1950 France ,489 21, Germany ,642 21, Japan ,940 22, UK ,321 21, USA ,903 30, Average ,259 23, MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 8
9 ECONOMIC GROWTH IN DEVELOPED COUNTRIES MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 9
10 ECONOMIC GROWTH IN DEVELOPED COUNTRIES Since 1950s, living standards in developed countries improved significantly Since 1970s, the growth rate of real output per capita dropped significantly Real output per capita of the 5 countries listed in the table have been converging. In other words, countries with lower initial output per capita in 1950 experienced faster growth From a static or dynamic point of view, growth rate of real output per capita is seemingly negatively related to the level of real output per capita. MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 10
11 A LOOK ACROSS TIME AND SPACE On the scale of human history, the growth of output per capita is a recent phenomenon From the end of the Roman Empire to roughly year 1500, there was essentially no growth of output per capita in Europe From about 1500 to 1700, growth of output per capita turned positive, about 0.1% per year Even during the Industrial Revolution, growth rates were not high by current standards MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 11
12 GROWTH THEORY Economic growth theory should be capable of explaining the stylized facts What are the factors determining the rate of economic growth? What are the roles played by capital accumulation? What are the impacts of technological progress? MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 12
13 THE AGGREGATE PRODUCTION FUNCTION The aggregate production function is a specification of the relation between aggregate output and the inputs in production Y = F(K, N) Y: Aggregate output K: Capital stock (machines, plants, office buildings and etc.) N: Labor (the number of workers in the economy) The function F, tells us how much output is produced for given quantities of capital and labor MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 13
14 RETURNS TO SCALE We assume that the aggregate production function exhibits constant returns to scale (Why?) Constant returns to scale is a property of the production function in which, if the quantities of inputs increase by μ times, total output will also increase by μ times. Y = F K, N μy = F μk, μn MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 14
15 DIMINISHING RETURNS TO FACTORS We assume there returns to inputs are diminishing Diminishing returns to capital refers to the property that increases in capital, given labor, lead to smaller and smaller increases in output as the level of capital increases Diminishing returns to labor refers to the property that increases in labor, given capital, lead to smaller and smaller increases in output as the level of labor increases MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 15
16 OUTPUT PER WORKER AND CAPITAL STOCK PER WORKER Constant returns to scale implies Y N = F K N, N N = F K, 1 = y = f(k) N Output per worker depends on capital stock per worker Higher capital stock per worker means higher output per worker MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 16
17 OUTPUT PER WORKER AND CAPITAL STOCK PER WORKER We emphasize on output per worker because it is a much better indicator of living standard than total output Note: In the models to be presented later, the output is averaged on employed population rather than the total population. Given a stable structure of the population and constant labor force participation rate, output per worker and output per capita exhibit similar properties (e.g. same growth rate). Hence, we often use the two terms interchangeably for the purpose of qualitative analysis. MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 17
18 OUTPUT PER WORKER AND CAPITAL STOCK PER WORKER MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 18
19 OUTPUT PER WORKER AND CAPITAL STOCK PER WORKER The figure in the last slide characterizes per worker production function The slope of the curve is f k Note: f k = F K (K, N) (Why?). Due to the diminishing returns to capital, f k is a decreasing function of k. As k increases, output per worker will move along the curve Technological progress will shift the curve upwards MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 19
20 SOURCES OF ECONOMIC GROWTH MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 20
21 SOURCES OF ECONOMIC GROWTH Economic growth, especially the growth of output per capita, is fueled by Capital accumulation Technological Progress Due to diminishing returns to capital, capital accumulation by itself cannot generate sustainable economic growth Sustainable growth requires continuous technological progress Growth rate of output per capita ultimately hinges on the rate of technological progress We are going to discuss how capital accumulation and technological progress affect economic growth in the following lectures MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 21
22 SUMMARY Stylized facts about economic growth Aggregate production function and per worker production function Sources of economic growth MACROECONOMICS, FALL 2016, DONGPENG LIU, NANJING UNIV 22
CAPITAL ACCUMULATION AND ECONOMIC GROWTH. Dongpeng Liu Department of Economics Nanjing University
CAPITAL ACCUMULATION AND ECONOMIC GROWTH Dongpeng Liu Department of Economics Nanjing University ROADMAP INCOME EXPENDITURE LIQUIDITY PREFERENCE IS CURVE LM CURVE SHORT-RUN IS-LM MODEL AGGREGATE DEMAND
More informationTECHNOLOGICAL PROGRESS AND ECONOMIC GROWTH. Dongpeng Liu Department of Economics Nanjing University
TECHNOLOGICAL PROGRESS AND ECONOMIC GROWTH Dongpeng Liu Department of Economics Nanjing University ROADMAP INCOME EXPENDITURE LIQUIDITY PREFERENCE IS CURVE LM CURVE SHORT-RUN IS-LM MODEL AGGREGATE DEMAND
More informationINCOME EXPENDITURE MODEL: GOODS MARKET EQUILIBRIUM. Dongpeng Liu Department of Economics Nanjing University
INCOME EXPENDITURE MODEL: GOODS MARKET EQUILIBRIUM Dongpeng Liu Department of Economics Nanjing University ROADMAP INCOME EXPENDITURE LIQUIDITY PREFERENCE IS CURVE LM CURVE SHORT-RUN IS-LM MODEL AGGREGATE
More informationMONEY AND THE INTEREST RATE DETERMINATION OF. Dongpeng Liu Department of Economics Nanjing University
MONEY AND THE DETERMINATION OF INTEREST RATE Dongpeng Liu Department of Economics Nanjing University ROADMAP INCOME EXPENDITURE LIQUIDITY PREFERENCE IS CURVE LM CURVE SHORT-RUN IS-LM MODEL AGGREGATE DEMAND
More information1 Figure 1 (A) shows what the IS LM model looks like for the case in which the Fed holds the
1 Figure 1 (A) shows what the IS LM model looks like for the case in which the Fed holds the money supply constant. Figure 1 (B) shows what the model looks like if the Fed adjusts the money supply to hold
More informationReview. Question 1. Answer 1. Question 2. Answer 2. Question 3. Exam Review (Questions Beyond Test 1) True or False? True or False?
Question 1 Review Exam Review (Questions Beyond Test 1) An increase in income causes the IS curve to shift to the right. Answer 1 When income changes we move along the IS curve. Income itself is not an
More informationFinal Exam - Economics 101 (Fall 2009) You will have 120 minutes to complete this exam. There are 105 points and 7 pages
Name Student ID Section day and time Final Exam - Economics 101 (Fall 2009) You will have 120 minutes to complete this exam. There are 105 points and 7 pages Multiple Choice: (20 points total, 2 points
More informationIntermediate Macroeconomic Theory II, Fall 2006 Solutions to Problem Set 4 (35 points)
Intermediate Macroeconomic Theory II, Fall 2006 Solutions to Problem Set 4 (35 points) 1. (16 points) For all of the questions below, draw the relevant curves. (a) (2 points) Suppose that the government
More informationChapter 17. Exchange Rates and International Economic Policy
Chapter 17 Exchange Rates and International Economic Policy Preview To examine the financial market that determines exchange rates in the long and short runs To understand the role of exchange rates in
More informationECON 1010 Principles of Macroeconomics Exam #2. Section A: Multiple Choice Questions. (30 points; 2 pts each)
ECON 1010 Principles of Macroeconomics Exam #2 Section A: Multiple Choice Questions. (30 points; 2 pts each) #1. If the price level in the economy and the nominal wages both doubled, then real wages would
More informationPart V: Introduction to Macroeconomics 19. The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates 20.
the Part V: Introduction to Macroeconomics 19. The Wealth of Nations: Defining and Measuring Macroeconomic s 20. 1 / 54 the Chapter 20 2017.8.10. 2 / 54 the 1 2 the 3 4 3 / 54 Chapter 20 the Q: Why is
More informationECON 1010 Principles of Macroeconomics. Midterm Exam #2. Professor: David Aadland. Spring Semester April 2 nd, 2019.
ECON 1010 Principles of Macroeconomics Midterm Exam #2 Professor: David Aadland Spring Semester 2019 April 2 nd, 2019 Your Name Section 1: Multiple Choice (50 pts). Circle the correct answer; each is worth
More informationIntermediate Macroeconomics, 7.5 ECTS
STOCKHOLMS UNIVERSITET Intermediate Macroeconomics, 7.5 ECTS SEMINAR EXERCISES STOCKHOLMS UNIVERSITET page 1 SEMINAR 1. Mankiw-Taylor: chapters 3, 5 and 7. (Lectures 1-2). Question 1. Assume that the production
More informationIntermediate Macroeconomics-ECO 3203
Intermediate Macroeconomics-ECO 3203 Homework 3 Solution, Summer 2017 Instructor, Yun Wang Instructions: The full points of this homework exercise is 100. Show all your works (necessary steps to get the
More informationEcon 302 Fall Don t forget to download a copy of the Homework Cover Sheet. Mark the location where you handed in your work.
Econ 302 Fall 2005 Don t forget to download a copy of the Homework Cover Sheet. Mark the location where you handed in your work. Homework #1; Chapter 1. This homework has three parts (A, B, C). Each part
More informationReview: objectives. CHAPTER 2 The Data of Macroeconomics slide 0
Review: objectives Remind you of the main theories. Overview of how parts of the course all fit together. Draw the most important and general lessons to remember from the course. CHAPTER 2 The Data of
More informationECON Drexel University Summer 2008 Assignment 2. Due date: July 29, 2008
ECON 202-001 Drexel University Summer 2008 Assignment 2 Due date: July 29, 2008 Instructor: Yuan Yuan Name This homework has up to 10 points bonus. Question 1 (40 points, 2 points each): MULTIPLE CHOICE.
More informationTOPIC 4 Economi G c rowth
TOPIC 4 Economic Growth Growth Accounting Growth Accounting Equation Y = A F(K,N) (production function). GDP Growth Rate =!Y/Y Growth accounting equation:!y/y =!A/A +! K!K/K +! N!N/N Output, in a country
More information3. TFU: A zero rate of increase in the Consumer Price Index is an appropriate target for monetary policy.
Econ 304 Fall 2014 Final Exam Review Questions 1. TFU: Many Americans derive great utility from driving Japanese cars, yet imports are excluded from GDP. Thus GDP should not be used as a measure of economic
More informationClass 3. Explaining Economic Growth. The Solow-Swan Model
MACROECONOMICS I Class 3. Explaining Economic Growth. The Solow-Swan Model March 7 th, 2014 Announcement Homewor assignment #1 is now posted on the web Deadline: March 21 st, before the class (12:00) Submission:
More informationWhy are some countries richer than others? Part 1
Understanding the World Economy Why are some countries richer than others? Part 1 Lecture 1 Nicolas Coeurdacier nicolas.coeurdacier@sciencespo.fr Practical matters Course website http://econ.sciences-po.fr/staff/nicolas-coeurdacier
More informationQUESTIONNAIRE B I. MULTIPLE CHOICE QUESTIONS (4 points each)
ECO2143 Macroeconomic Theory II Final examination: April 25, 2007 University of Ottawa Professor: Louis Hotte Time allowed: 3h00min Attention: Not all questionnaires are the same. This is questionnaire
More informationMidterm Examination Number 1 February 19, 1996
Economics 200 Macroeconomic Theory Midterm Examination Number 1 February 19, 1996 You have 1 hour to complete this exam. Answer any four questions you wish. 1. Suppose that an increase in consumer confidence
More informationLong-Run Economic Growth
Economic Growth Long-Run Economic Growth A. It is the long-run upward trend in the economy. (i.e., growth in potential GDP) B. Small differences in growth rates have large long-run effects. 1. Ex. Suppose
More informationMacroeconomics (Code: E214) - Lecturer: Dr. Amira Akl Ahmed. Faculty of Commerce Department of Economics English Section Academic year 2013/2014
Faculty of Commerce Department of Economics English Section Academic year 2013/2014 Questions for Chapter 6 of Macroeconomics, 10e (Parkin) First: Multiple choice questions The Basics of Economic Growth
More informationE-322 Muhammad Rahman CHAPTER-6
CHAPTER-6 A. OBJECTIVE OF THIS CHAPTER In this chapter we will do the following: Look at some stylized facts about economic growth in the World. Look at two Macroeconomic models of exogenous economic growth
More informationMACROECONOMICS. Economic Growth II: Technology, Empirics, and Policy MANKIW. In this chapter, you will learn. Introduction
C H A P T E R 8 Economic Growth II: Technology, Empirics, and Policy MACROECONOMICS N. GREGORY MANKIW 2007 Worth Publishers, all rights reserved SIXTH EDITION PowerPoint Slides by Ron Cronovich In this
More informationThe Theory of Economic Growth
The Theory of The Importance of Growth of real GDP per capita A measure of standards of living Small changes make large differences over long periods of time The causes and consequences of sustained increases
More informationThe Theory of Economic Growth
The Theory of 1 The Importance of Growth of real GDP per capita A measure of standards of living Small changes make large differences over long periods of time The causes and consequences of sustained
More informationAviation Economics & Finance
Aviation Economics & Finance Professor David Gillen (University of British Columbia )& Professor Tuba Toru-Delibasi (Bahcesehir University) Istanbul Technical University Air Transportation Management M.Sc.
More informationPlease choose the most correct answer. You can choose only ONE answer for every question.
Please choose the most correct answer. You can choose only ONE answer for every question. 1. Only when inflation increases unexpectedly a. the real interest rate will be lower than the nominal inflation
More information2.2 Aggregate demand and aggregate supply
The business cycle Short-term fluctuations and long-term trend Explain, using a business cycle diagram, that economies typically tend to go through a cyclical pattern characterized by the phases of the
More informationPART II CLASSICAL THEORY. Chapter 3: National Income: Where it Comes From and Where it Goes 1/51
PART II CLASSICAL THEORY Chapter 3: National Income: Where it Comes From and Where it Goes 1/51 Chapter 3: National Income: Where it Comes From and Where it Goes 2/51 *Slides based on Ron Cronovich's slides,
More informationChapter 16. Price Levels and the Exchange Rate in the Long Run
Chapter 16 Price Levels and the Exchange Rate in the Long Run Preview Law of one price Purchasing power parity Long-run model of exchange rates: monetary approach (based on absolute version of PPP) Relationship
More informationECON 302: Intermediate Macroeconomic Theory (Spring ) Discussion Section Week 7 March 7, 2014
ECON 302: Intermediate Macroeconomic Theory (Spring 2013-14) Discussion Section Week 7 March 7, 2014 SOME KEY CONCEPTS - Long-run Economic Growth - Growth Accounting - Solow Growth Model - Endogenous Growth
More informationEC202 Macroeconomics
EC202 Macroeconomics Koç University, Summer 2014 by Arhan Ertan Study Questions - 3 1. Suppose a government is able to permanently reduce its budget deficit. Use the Solow growth model of Chapter 9 to
More informationCome and join us at WebLyceum
Come and join us at WebLyceum For Past Papers, Quiz, Assignments, GDBs, Video Lectures etc Go to http://www.weblyceum.com and click Register In Case of any Problem Contact Administrators Rana Muhammad
More informationQUESTIONNAIRE A I. MULTIPLE CHOICE QUESTIONS (2 points each)
ECO2143 Macroeconomic Theory II First mid-term examination: July 3rd 2014 University of Ottawa Professor: Louis Hotte Time allotted: 1h 30min Attention: Not all questionnaires are the same. This is questionnaire
More informationMaster Economics & Business Understanding the World Economy. Sample Multiple choice
Master Economics & Business Understanding the World Economy Sample Multiple choice It is a multiple choice questionnaire. You have to select at LEAST one answer from the four proposed answers. You have
More informationRoad Map to this Lecture
Economic Growth 1 Road Map to this Lecture 1. Steady State dynamics: 1. Output per capita 2. Capital accumulation 3. Depreciation 4. Steady State 2. The Golden Rule: maximizing welfare 3. Total Factor
More informationImperfect Knowledge, Asset Price Swings and Structural Slumps: A Cointegrated VAR Analysis of their Interdependence
Imperfect Knowledge, Asset Price Swings and Structural Slumps: A Cointegrated VAR Analysis of their Interdependence Katarina Juselius Department of Economics University of Copenhagen Background There is
More informationProblem Set #2. Intermediate Macroeconomics 101 Due 20/8/12
Problem Set #2 Intermediate Macroeconomics 101 Due 20/8/12 Question 1. (Ch3. Q9) The paradox of saving revisited You should be able to complete this question without doing any algebra, although you may
More informationTextbook Media Press. CH 28 Taylor: Principles of Economics 3e 1
CH 28 Taylor: Principles of Economics 3e 1 The Building Blocks of Neoclassical Analysis Neoclassical economics argues that in the long run, the economy will adjust back to its potential GDP level of output
More informationPart III. Cycles and Growth:
Part III. Cycles and Growth: UMSL Max Gillman Max Gillman () AS-AD 1 / 56 AS-AD, Relative Prices & Business Cycles Facts: Nominal Prices are Not Real Prices Price of goods in nominal terms: eg. Consumer
More informationIntermediate Macroeconomics
Intermediate Macroeconomics Lecture 5 - Endogenous growth models Zsófia L. Bárány Sciences Po 2014 February Recap: Why go beyond the Solow model? we looked at the Solow model with technological progress
More information6. The Aggregate Demand and Supply Model
6. The Aggregate Demand and Supply Model 1 Aggregate Demand and Supply Curves The Aggregate Demand Curve It shows the relationship between the inflation rate and the level of aggregate output when the
More information7) What is the money demand function when the utility of money for the representative household is M M
1) The savings curve is upward sloping, because (a) high interest rates increase the future returns that households obtain from their savings. (b) high interest rates increase the opportunity cost of consuming
More informationFinance Macroeconomic Analysis Midterm #1 Summer 2013
Finance 30220 Macroeconomic Analysis Midterm #1 Summer 2013 Name Answer all questions. Note that only complete answers will be awarded full credit. Partial credit will be given for incomplete answers.
More informationMacroeconomics CHAPTER 8. Long-Run Economic Growth
Macroeconomics CHAPTER 8 Long-Run Economic Growth PowerPoint Slides by Can Erbil 2006 Worth Publishers, all rights reserved What you will learn in this chapter: How long-run growth can be measured by the
More informationFINAL EXAM (Two Hours) DECEMBER 21, 2016 SECTION #
COURSE 180.101 MACROECONOMICS FINAL EXAM (Two Hours) DECEMBER 21, 2016 NAME TA Part I (20 points) SECTION # 1 POINT EACH QUESTION 1. China s GDP appears to be roughly 55% of U.S. GDP, if we use what currency
More informationECON 3560/5040 Week 3
ECON 3560/5040 Week 3 ECONOMIC GROWTH - Understand what causes differences in income over time and across countries - Sources of economy s output: factors of production (K, L) and production technology
More informationECONOMIC GROWTH. Objectives. Transforming People s Lives. Transforming People s Lives. Transforming People s Lives CHAPTER
ECONOMIC 30 GROWTH CHAPTER Objectives After studying this chapter, you will able to Describe the long-term growth trends in Canada and other countries and regions Identify the main sources of long-term
More informationMonetary Macroeconomics Lecture 2. Mark Hayes
Diploma Macro Paper 2 Monetary Macroeconomics Lecture 2 Aggregate demand: Consumption and the Keynesian Cross Mark Hayes slide 1 Outline Introduction Map of the AD-AS model slide 2 Goods market KX and
More informationECONOMIC GROWTH 1. THE ACCUMULATION OF CAPITAL
ECON 3560/5040 ECONOMIC GROWTH - Understand what causes differences in income over time and across countries - Sources of economy s output: factors of production (K, L) and production technology differences
More informationEconomic Growth II. macroeconomics. fifth edition. N. Gregory Mankiw. PowerPoint Slides by Ron Cronovich Worth Publishers, all rights reserved
CHAPTER EIGHT Economic Growth II macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved Learning objectives Technological progress
More informationChapter 15. The Foreign Exchange Market. Chapter Preview
Chapter 15 The Foreign Exchange Market Chapter Preview In the mid-1980s, American businesses became less competitive relative to their foreign counterparts. By the 2000s, though, competitiveness increased.
More informationEcon / Summer 2005
Econ 3560.001 / 5040.001 Summer 2005 INTERMEDIATE MACROECONOMIC THEORY / MACROECONOMIC ANALYSIS FINAL EXAM Name (Last) (First) Signature Instructions The exam consists of 30 multiple-choice questions (Part
More informationMacroeconomics. A European Text OXFORD UNIVERSITY PRESS SIXTH EDITION. Michael Burda and Charles Wyplosz
Macroeconomics A European Text SIXTH EDITION Michael Burda and Charles Wyplosz OXFORD UNIVERSITY PRESS Detailed Contents List of Tables xiii List of Figures xv List of Boxes xix 1 PART I Introduction to
More informationHOMEWORK 8 (CHAPTER 16 PRICE LEVELS AND THE EXCHANGE RATE IN THE LONG RUN) ECO41 FALL 2015 UDAYAN ROY
HOMEWORK 8 (CHAPTER 16 PRICE LEVELS AND THE EXCHANGE RATE IN THE LONG RUN) ECO41 FALL 2015 UDAYAN ROY Each correct answer is worth 1 point. The maximum score is 20 points. This homework is due in class
More informationECON MACROECONOMIC PRINCIPLES Instructor: Dr. Juergen Jung Towson University. J.Jung Chapter 8 - Economic Growth Towson University 1 / 64
ECON 202 - MACROECONOMIC PRINCIPLES Instructor: Dr. Juergen Jung Towson University J.Jung Chapter 8 - Economic Growth Towson University 1 / 64 Disclaimer These lecture notes are customized for the Macroeconomics
More informationEconomics 302 Intermediate Macroeconomic
Economics 302 Intermediate Macroeconomic Theory and Policy (Spring 2010) Lecture 28-29 May 3-5, 2010 slide 0 Outline Why is the long run important? The determinants of economic growth Full employment and
More informationChapter 6 ECONOMIC GROWTH. World Economic Growth. In this chapter-
Chapter 6 ECONOMIC GROWTH In this chapter- Define and calculate the growth rate and explain the implications of sustained growth in economic activity Briefly describe the economic growth trends in the
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 12: THE DERIVATION OF THE AGGREGATE DEMAND CURVE
ECO 209 MACROECONOMIC THEOR AND POLIC LECTURE 12: THE DERIVATION OF THE AGGREGATE DEMAND CURVE Gustavo Indart Slide 1 FIXED-PRICE MODEL Everything we have done in the IS-LM model has been in terms of demand,
More informationAnswers to Questions: Chapter 7
Answers to Questions in Textbook 1 Answers to Questions: Chapter 7 1. Any international transaction that creates a payment of money to a U.S. resident generates a credit. Any international transaction
More information13. CHAPTER: Aggregate Supply
TOBB-ETU, Economics Department Macroeconomics I (IKT 233) Ozan Eksi Practice Questions with Answers (for Final) 13. CHAPTER: Aggregate Supply 1-) What can you expect when there s an oil shock? (c) a-)
More informationSolow instead assumed a standard neo-classical production function with diminishing marginal product for both labor and capital.
Module 5 Lecture 34 Topics 5.2 Growth Theory II 5.2.1 Solow Model 5.2 Growth Theory II 5.2.1 Solow Model Robert Solow was quick to recognize that the instability inherent in the Harrod- Domar model is
More informationIn this chapter, you will learn C H A P T E R National Income: Where it Comes From and Where it Goes CHAPTER 3
C H A P T E R 3 National Income: Where it Comes From and Where it Goes MACROECONOMICS N. GREGORY MANKIW 007 Worth Publishers, all rights reserved SIXTH EDITION PowerPoint Slides by Ron Cronovich In this
More informationAGGREGATE DEMAND, AGGREGATE SUPPLY, AND INFLATION. Chapter 25
1 AGGREGATE DEMAND, AGGREGATE SUPPLY, AND INFLATION Chapter 25 2 One of the most important issues in macroeconomics is the determination of the overall price level Up to now, we took the price level as
More informationECONOMIC GROWTH CHAPTER
ECONOMIC GROWTH 17 CHAPTER The Basics of Economic Growth U.S. real GDP per person and the standard of living tripled between 1960 and 2010. We see even more dramatic change in China, where incomes have
More informationME II, Prof. Dr. T. Wollmershäuser. Chapter 12 Saving, Capital Accumulation, and Output
ME II, Prof. Dr. T. Wollmershäuser Chapter 12 Saving, Capital Accumulation, and Output Version: 23.06.2010 Saving, Capital Accumulation, and Output The effects of the saving rate the ratio of saving to
More information13. CHAPTER: Aggregate Supply
TOBB-ETU, Economics Department Macroeconomics I (IKT 233) 2017/18 Fall-Ozan Eksi Practice Questions with Answers (for Final) 13. CHAPTER: Aggregate Supply 1-) What can you expect when there s an oil shock?
More informationObjectives AGGREGATE DEMAND AND AGGREGATE SUPPLY
AGGREGATE DEMAND 7 AND CHAPTER AGGREGATE SUPPLY Objectives After studying this chapter, you will able to Explain what determines aggregate supply Explain what determines aggregate demand Explain macroeconomic
More information1 Chapter 1: Economic growth
1 Chapter 1: Economic growth Reference: Barro and Sala-i-Martin: Economic Growth, Cambridge, Mass. : MIT Press, 1999. 1.1 Empirical evidence Some stylized facts Nicholas Kaldor at a 1958 conference provides
More informationECON 442:ECONOMIC THEORY II (MACRO) 8 1: W/C
ECON 442:ECONOMIC THEORY II (MACRO) Lecture 8 Part 1: W/C 27 March 2017 Aggregate Demand & General Equilibrium Analysis (The AS-AD Model) Ebo Turkson, PhD From the Short to the Medium Run: The IS-LM-PC
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 7: INTRODUCTION TO THE OPEN ECONOMY
ECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 7: INTRODUCTION TO THE OPEN ECONOMY Gustavo Indart Slide 1 THE BALANCE OF PAYMENTS On the one hand, the home country will export goods and services to other
More information1. (16 points) For all of the questions below, draw the relevant curves.
Intermediate Macroeconomic Theory II, Fall 2006 Solutions to Problem Set 4 (35 points) 1. (16 points) For all of the questions below, draw the relevant curves. (a) (2 points) Suppose that the government
More informationEconomic Growth: Extensions
Economic Growth: Extensions 1 Road Map to this Lecture 1. Extensions to the Solow Growth Model 1. Population Growth 2. Technological growth 3. The Golden Rule 2. Endogenous Growth Theory 1. Human capital
More informationPart 1: Short answer, 60 points possible Part 2: Analytical problems, 40 points possible
Midterm #1 ECON 322, Prof. DeBacker September 25, 2018 INSTRUCTIONS: Please read each question below carefully and respond to the questions in the space provided (use the back of pages if necessary). You
More information5.1 Introduction. The Solow Growth Model. Additions / differences with the model: Chapter 5. In this chapter, we learn:
Chapter 5 The Solow Growth Model By Charles I. Jones Additions / differences with the model: Capital stock is no longer exogenous. Capital stock is now endogenized. The accumulation of capital is a possible
More informationBBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar
BBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar L8: The Foreign Exchange Market www. notes638.wordpress.com Copyright 2015 Pearson Education, Ltd. All rights reserved. 8-1 Chapter
More informationAggregate Demand, Aggregate Supply, and the Self-Correcting Economy
Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy The Role of Aggregate Demand & Supply Endogenizing the Price Level Inflation Deflation Price Stability The Aggregate Demand Curve Relates
More informationECO 209Y MACROECONOMIC THEORY AND POLICY LECTURE 9: INTRODUCTION TO THE AD-AS MODEL
ECO 209 MACROECONOMIC THEOR AND OLIC LECTURE 9: INTRODUCTION TO THE AD- MODEL Gustavo Indart Slide 1 DEMAND IN THE FIXED-RICE MODEL Everything we have done in the IS-LM model has been in terms of demand,
More informationInnovations in Macroeconomics
Paul JJ. Welfens Innovations in Macroeconomics Third Edition 4y Springer Contents A. Globalization, Specialization and Innovation Dynamics 1 A. 1 Introduction 1 A.2 Approaches in Modern Macroeconomics
More informationChapter 9 Chapter 10
Assignment 4 Last Name First Name Chapter 9 Chapter 10 1 a b c d 1 a b c d 2 a b c d 2 a b c d 3 a b c d 3 a b c d 4 a b c d 4 a b c d 5 a b c d 5 a b c d 6 a b c d 6 a b c d 7 a b c d 7 a b c d 8 a b
More information1. Introduction to Macroeconomics
Fletcher School of Law and Diplomacy, Tufts University 1. Introduction to Macroeconomics E212 Macroeconomics Prof George Alogoskoufis The Scope of Macroeconomics Macroeconomics, deals with the determination
More informationLong-term economic growth Growth and factors of production
Understanding the World Economy Master in Economics and Business Long-term economic growth Growth and factors of production Lecture 2 Nicolas Coeurdacier nicolas.coeurdacier@sciencespo.fr Output per capita
More informationEastern Mediterranean University Faculty of Business and Economics Department of Economics Spring Semester
Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2015-16 Spring Semester Duration: 90 minutes ECON102 - Introduction to Economics II Final Exam Type A 2 June 2016
More informationVII. Short-Run Economic Fluctuations
Macroeconomic Theory Lecture Notes VII. Short-Run Economic Fluctuations University of Miami December 1, 2017 1 Outline Business Cycle Facts IS-LM Model AD-AS Model 2 Outline Business Cycle Facts IS-LM
More informationChapter 6. International Parity Conditions. International Parity Conditions: Learning Objectives. Prices and Exchange Rates
Chapter 6 International arity Conditions International arity Conditions: Learning Objectives Examine how price levels and price level changes (inflation) in countries determine the exchange rate at which
More informationMultiple Choice Questions (3 points each) Please answer the questions on the green scantron.
ECON 203-200, Fall 2006 EXAM #2 Multiple Choice Questions (3 points each) Please answer the questions on the green scantron. 1) If the short run aggregate supply curve is vertical, a decrease in money
More informationChapter 10 Aggregate Demand I CHAPTER 10 0
Chapter 10 Aggregate Demand I CHAPTER 10 0 1 CHAPTER 10 1 2 Learning Objectives Chapter 9 introduced the model of aggregate demand and aggregate supply. Long run (Classical Theory) prices flexible output
More informationIntroduction to Economic Fluctuations. Instructor: Dmytro Hryshko
Introduction to Economic Fluctuations Instructor: Dmytro Hryshko 1 / 32 Outline facts about the business cycle how the short run differs from the long run an introduction to aggregate demand an introduction
More information5. If capital lasts an average of 25 years, the depreciation rate is percent per year. A) 25 B) 5 C) 4 D) 2.5
1. The production function y = f(k) means: A) labor is not a factor of production. B) output per worker is a function of labor productivity. C) output per worker is a function of capital per worker. D)
More informationThis paper is not to be removed from the Examination Halls UNIVERSITY OF LONDON
~~EC2065 ZB d0 This paper is not to be removed from the Examination Halls UNIVERSITY OF LONDON EC2065 ZB BSc degrees and Diplomas for Graduates in Economics, Management, Finance and the Social Sciences,
More informationChapter 8. Economic Growth II: Technology, Empirics and Policy 10/6/2010. Introduction. Technological progress in the Solow model
Chapter 8 : Technology, Empirics and Policy Introduction In the Solow of Chapter 7, the production technology is held constant. income per capita is constant in the steady state. Neither point is true
More informationMacroeconomics 1 Lecture 11: ASAD model
Macroeconomics 1 Lecture 11: ASAD model Dr Gabriela Grotkowska Lecture objectives difference between short run & long run aggregate demand aggregate supply in the short run & long run see how model of
More informationIntermediate Macroeconomic Theory II, Winter 2007 Instructor: Dmytro Hryshko Solutions to Problem Set 4 (35 points).
Intermediate Macroeconomic Theory II, Winter 2007 Instructor: Dmytro Hryshko Solutions to Problem Set 4 (35 points). 1. (20 points) Use the IS{LM model to determine the short- and long-run eects of each
More informationMoney Supply, Inflation, and Interest Rates
Money Supply, Inflation, and Interest Rates ECON 30020: Intermediate Macroeconomics Prof. Eric Sims University of Notre Dame Spring 2018 1 / 19 Readings GLS Ch. 18 2 / 19 Money, Inflation, and Interest
More informationLecture 22. Aggregate demand and aggregate supply
Lecture 22 Aggregate demand and aggregate supply By the end of this lecture, you should understand: three key facts about short-run economic fluctuations how the economy in the short run differs from the
More information). In Ch. 9, when we add technological progress, k is capital per effective worker (k = K
Economics 285 Chris Georges Help With Practice Problems 3 Chapter 8: 1. Questions For Review 1,4: Please see text or lecture notes. 2. A note about notation: Mankiw defines k slightly differently in Chs.
More information