Gordon_Answers11e_ch11 - 122 Gordon • Macroeconomics...

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Unformatted text preview: 122 Gordon • Macroeconomics, Eleventh Edition Section 11-9 concludes this chapter by synopsizing the two important themes of this chapter: the reasons for non-convergence of poor countries to the growth levels of the United States, and the productivity revival since 1995. ¡ Changes in the Eleventh Edition Sections 11-1 through 11-4 are relatively unchanged from the 10th edition. In Section 11-3, Gordon updates the names of the fast growing nations and updates Figure 11-3 by giving the growth of output per worker between 1960 and 2004 (instead of 2000). Table 11-1 has been adjusted similarly, and a new IP Box : “A Symptom of Poverty: Urban Slums in the Poor Cities” has been added in Section 11-4. In Section 11-5, Subsection 11-5a about political and legal determinants of costs and returns has been modified slightly with added explanations about countries’ patents, regulations and legal systems. A new IP Box : “Institutions Matter: North Korea versus South Korea” has been added. Existing IP Box : “Growth Success and Failure in the Tropics” has been altered slightly with a new explanation about the problems of economic developments in the tropics. The case study in Section 11-6 has been revised and expanded with new text discussing the three eras of postwar U.S. productivity growth. An updated Figure 11-5 presents the growth rate of labor productivity in the U.S., 1960–2007 (instead of 1960–2004). The Box: “How the Great Inventions Created Economic Growth: Life in the Bad Old Days” has been deleted. The discussion about the second cause for “Why Did Productivity Growth Explode after the High-Tech Investment Collapsed?” in Subsection 11-6g has been changed substantially with a new explanation. The case study of Section 11-8, which focuses on the differences between U.S. and European productivity growth, has been updated to include the year 2006. The conclusion section has remained the same with only a very minor change of words in the last sentence. ¡ Answers to Questions in Textbook 1. Labor productivity is the ratio of output to labor input. Multi-factor productivity is the ratio of output to a weighted (geometric) average of multiple factor inputs. 2. The growth rate of labor’s share of national income = ( w − p ) − ( y − n ), where ( w − p ) is the growth rate of real wages and ( y − n ) is the growth rate of labor productivity. Labor’s share rises, then, if real wage growth exceeds labor productivity growth, declines if real wage growth is slower than labor productivity growth, and remains constant if real wages grow at the same rate as labor productivity. 3. The Solow neoclassical growth model predicts that poor countries will steadily converge to the income levels of rich countries. However, the ratio of income per person in the richest countries to that of the poor countries has barely changed in the last 40 years. Some countries, for example, United States, Britain, and France have remained at the frontier of per person income over that...
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This note was uploaded on 09/04/2010 for the course ECON 311 taught by Professor Gordon during the Spring '08 term at Northwestern.

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Gordon_Answers11e_ch11 - 122 Gordon • Macroeconomics...

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