MacroEcon Chapter 5

MacroEcon Chapter 5 - Chapter 5: Technology and Economic...

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Chapter 5: Technology and Economic Growth 5.1 Growth Accounting Formula: (N= Labor, K= Capital, A= Technology and Y= GDP) *These weights of 70% for labor and 30% for capital are derived from data on the relative shares of capital and labor in national income. *The growth accounting formula is used to determine the contributions of capital and labor growth, with the contribution of technology estimated as a residual. 5.2 Endogenous Growth Theory - (Paul Romer) endeavors to provide an explicit theory that determines the behavior of the technology factor (A). *Production Function for Technology = f(N A , K A , A) (N A = Labor producing technology, K A = Capital producing technology, A= Technology) *shows how technological growth in endogenous because it is a function of the investment (N, K) in technology. * Technology is characterized by nonrivalry and partial excludability . ● Since Technology doesn’t face diminishing returns, investments in technology have permanent increase in the rate of growth (not only during the transition period).
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This note was uploaded on 11/02/2008 for the course ECON 304 taught by Professor Greenlaw during the Spring '07 term at Mary Washington.

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MacroEcon Chapter 5 - Chapter 5: Technology and Economic...

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