ch_7 - LectureNoteChapter7 EconomicGrowthI:Capital...

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slide 1 Lecture Note-Chapter 7 Economic Growth I: Capital  Growth University of Waterloo Department of Economics Spring 2010 1 CHAPTER 7 Economic Growth I
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slide 2  Introduction Having analyzed the overall production, distribution, and allocation of national income, we now consider the determinants of long-run growth. One stylized fact of macroeconomics is that, in developed economies, output grows over time. This growth is irregular and is sometimes interrupted by periods of falling output (recessions), but the overall trend is indisputably upward. CHAPTER 7 Economic Growth I
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slide 3  Introduction Real GDP in the United States has tripled over the last 50 years, and per capita real GDP has more than doubled. Looking at the economic performance of different countries, it is also evident that different countries enjoy very different standards of living. CHAPTER 7 Economic Growth I
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slide 4  Introduction Traditionally, macroeconomics analyzes the behaviour of output in terms of both its overall upward trend and the fluctuations around that trend . The fluctuations around the trend are known as the business cycle. Much of macroeconomics is devoted to understanding these short-run changes; we turn to them later on. CHAPTER 7 Economic Growth I
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slide 5  Introduction But macroeconomists are also keen to understand the growth of the natural rate of output in the long run. Economic growth is one of the reasons why macroeconomics exists as a field of study and they’re the primary consideration of many macroeconomists. CHAPTER 7 Economic Growth I
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slide 6  Introduction Economic growth research try to understand what causes the differences in income over time and across countries. Our model of economic growth is known as the Solow growth model and is an explicitly dynamic analysis that shows how the growth of output is affected by saving, population growth, and technological progress. CHAPTER 7 Economic Growth I
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slide 7  Introduction This chapter analyzes the role of saving and population growth while Chapter 8 examines the role of technological progress. CHAPTER 7 Economic Growth I
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slide 8 CHAPTER 7 Economic Growth I In this chapter, you will learn… the closed economy Solow model. how a country’s standard of living depends on its saving and population growth rates. how to use the “Golden Rule” to find the optimal saving rate and capital stock.
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slide 9 CHAPTER 7 Economic Growth I Why growth matters Data on infant mortality rates: 20% in the poorest 1/5 of all countries 0.4% in the richest 1/5 In Pakistan, 85% of people live on less than $2/day. One-fourth of the poorest countries have had
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This note was uploaded on 11/25/2010 for the course ECON 202 taught by Professor Angelatrimarchi during the Spring '10 term at Waterloo.

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ch_7 - LectureNoteChapter7 EconomicGrowthI:Capital...

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