chapter04 The Theory of Economic Growth(宏观经济学-加州大学-詹姆斯·布拉德福特·德隆).ppt

CHAPTER 4 The Theory of Economic Growth Questions What are the principal determinants of long-run economic growth? What equilibrium condition is useful in analyzing long-run growth? How quickly does an economy head for its steady-state growth path? Questions What effect does faster population growth have on long-run growth? What effect does a higher savings rate have on long-run growth? Long-Run EconomicGrowth... is the most important aspect of how the economy performs can be accelerated by good economic policies can be retarded by bad economic policies Long-Run Economic Growth Policies and initial conditions affect growth through two channels their impact on the level of technology multiplies the efficiency of labor their impact on the capital intensity of the economy the stock of machines, equipment, and buildings that the average worker has at his or her disposal Technology leads to a higher efficiency of labor skills and education of the labor force ability of the labor force to handle modern machines the efficiency with which the economy’s businesses and markets function Economists are good at analyzing the consequences of better technology have less to say about the sources Capital Intensity There is a direct relationship between capital-intensity and productivity Two principal determinants investment effort the share of total production saved and invested in order to increase the capital stock investment requirements how much of new investment is used to equip new workers with the standard level of capital or to replace worn-out or obsolete capital Standard Growth Model Also called the Solow model Steady-state balanced-growth equilibrium the capital intensity of the economy is stable the economy’s capital stock and level of real GDP are growing at the same rate the economy’s capital-output ratio is constant Standard Growth Model First component is the production function tells us how the productive resources of the economy can be used to produce and determ