2018SpringUN3213Lecture14Romer2.pdf

2018SpringUN3213Lecture14Romer2.pdf - EconomicsW3213...

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IntermediateMacroeconomics EconomicsW3213 Professor:JónSteinsson Lecture14 ExtraRomerModelSlides 1
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Romer Model “Endogenizes”knowledgecreation anendogenousvariableasopposetoan exogenousvariable/parameter. Forsimplicity,weignorecapital Romer modelwithcapitalinJonesch.6.9. 2
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ProductioninRomer Model Productionof goods : ௬௧ Constantreturnstoobjects Increasingreturnstoobjectsandideas Productionof new ideas/knowledge/recipes: ௧ାଵ ௔௧ 3
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ProductionofNewIdeas ௧ାଵ ௔௧ Notation: ௧ାଵ ௧ାଵ Economyproducesnewideasusing: Existingideas Labor Economystartswithstockofideas 4
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ResourceConstraint Samestockofideasusedbothin Productionofobjects Productionofnewideas (Ideasarenon‐rivalrous) Eachhouroflabormustbespentoneither: ௬௧ ௔௧ (laborisrivalrous) 5
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AllocationofLabor Lastpieceofmodel: Howdoeseconomydecidehowmuchlaborto allocatetoproductionofnewideasvs.output?
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  • Fall '13
  • Dovid
  • Macroeconomics, romer model, August 26, January 20, January 6, March 11

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