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Econ407 J. Tessada Spring 2009 Introduction Facts of Economic Growth The Road Ahead Econ407 Advanced Macroeconomics Lecture 1: Introduction to Economic Growth Jos´e Tessada University of Maryland - College Park February 3, 2009 Econ407 J. Tessada Spring 2009 Introduction Facts of Economic Growth The Road Ahead Announcements Website: New materials: Links to readings Handouts for the paper Updated syllabus and handout for last lecture Next class: We will cover Solow model No readings assigned Today: Look at the data to see what we want to understand
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Econ407 J. Tessada Spring 2009 Introduction Facts of Economic Growth The Road Ahead Introduction Before studying models, let us review what are the facts we are trying to understand. However, you should keep in mind that models can also help our understanding of economic growth. I do not see how one can look at figures like these without seeing them as representing possibilities. Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia’s or Egypt’s? If so, what exactly? If not, what is it about the “nature of India” that makes it so? The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else. (Lucas 1988, p.5) Econ407 J. Tessada Spring 2009 Introduction Facts of Economic Growth The Road Ahead Introduction These differences are also observed in other important dimensions Life expectancy Infant mortality Consumption While we focus on income per capita and growth rates we cannot forget the other variables In many cases the process of development and growth involves “winners” and “losers” within a country: For example, sectoral change We will review some “facts” which summarize (part of) the evidence on long-run economic growth (follow Jones’ book)
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Econ407 J. Tessada Spring 2009 Introduction Facts of Economic Growth The Road Ahead Figure 1: Log GDP per capita, PPP adj., and consumption per capita in 2000. Econ407 J. Tessada Spring 2009 Introduction Facts of Economic Growth The Road Ahead Figure 2: Log GDP per capita, PPP adj., and life expectancy at birth in 2000.
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Econ407 J. Tessada Spring 2009 Introduction Facts of Economic Growth Stylized Facts Additional Facts The Road Ahead Y / N , 1997 Y / L , 1997 LFP, 1997 g (60-97) “Rich” countries USA 20049 40834 0.49 1.4 Japan 16003 26264 0.63 4.4 France 14650 31986 0.46 2.3 UK 14472 29295 0.49 1.9 Spain 10685 29396 0.36 3.5 “Poor” countries China 2387 3946 0.60 3.5 India 1624 4156 0.39 2.3 Zimbabwe 1242 2561 0.49 0.4 Uganda 697 1437 0.49 0.5 “Growth miracles” Hong Kong 18811 28918 0.65 3.5 Singapore 17559 36541 0.48 5.4
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