Sep28EGIV

Sep28EGIV - Economic Growth: Fundamentals Monday; October...

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Economic Growth: Fundamentals Monday; October 3, 2005
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Announcements ± No Homework due on Thursday ± No Conferences this Thursday, unless… ± Homework will be posted on Wednesday ± Solutions will be posted right away ± Office Hours: 3pm to 5pm Robinson Coffee Room ± Outline: The fundamentals of growth ² Government/Institutions ² Inequality ² Culture ² Geography ± Midterm Details & Review
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Consider this… ± Wife Kills Husband with a Shotgun ± Proximate Effects: bullet, fatal injuries, internal bleeding, etc… ± Fundamental Effects: husband was cheating, wife is pyschotic, let your imagination run wild ± Capital, labor, technology and efficiency are proximate determinants of output ± Fundamental determinants of output are those that influence output through the proximate effects
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Fundamentals ± There are many fundamental determinants of income that one can think of. We will speak of only a few broad categories today. ± Fundamentals are subject to reverse causation with each other and with income : X->Y and Y->X ² Example of reverse causation: I like someone, but not vice versa ± Does the person dislike me because I like them? ± Do I like the person because they dislike me?
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I. Institutions M OTIVATION T HINKING P OINTS… ± Prior to 1953, a united country ± In 2000, income differs by a factor of 16 ± ± INSTITUTIONS: “a set of rules, compliance procedures, and moral and ethical norms designed to constrain the behavior of individuals in the interest of maximizing the wealth or utility of principals” -North 1981
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Basics for Analysis ± Normative Analysis: How should the government act? (recommended actions and roles the government should play) ± Positive Analysis: Why does the government act as such? (describe the
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This note was uploaded on 07/06/2009 for the course ECON 1210 taught by Professor Howitt during the Fall '08 term at Brown.

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Sep28EGIV - Economic Growth: Fundamentals Monday; October...

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