GROWTHCLASS - 1 Economic Growth GROWTH ¢ 3.22 real GDP...

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Unformatted text preview: 1 Economic Growth ¡ GROWTH ¢ 3.22% real GDP per year ¢ 2% real per capita GDP per year (‘50-’09) ¡ GDP/Pop ¡ Doubles every 36 years – rule of 72 ¡ Doubled since 1972 ¡ PRODUCTIVITY 1 ¢ Output per worker (manhour) Y/L ¢ Y=Y/L*L ¢ Y/POP=Y/L*L/POP ¡ Interrupted but ongoing ¡ Antigrowth vid, malthus Growth is Relatively New 2 In the News? 3 2 Course Issues ¡ Final exam Weds 12/22 8am College Ave Gym ¡ Speed Networking ¡ Target 4 Application -Growth Rates of Real Per Capita GDP ¢ China in 2000 = U.S. in 1870 start 2000 % ch U.S. 1870 3,347 34,260 1.8 U.K. 1870 4,107 23,550 1.35 Japan 1890 1,256 26,460 2.8 China 1900 598 3,940 1.9 5 Pak 1900 616 1,960 1.16 ¢ China catch-up 2% v 9% 2009 figures ¢ (41,646)e ( n*.02 )=(2,494) e ( n*.09 ) -> 41,646/2,494 = e ( n*.09-.02 ) ¢->ln(41,646/2,494)= ln(e ( n*(.09-.02 ) )= ln(16.6)=n*.07=2.809/.07=40.13 years ¢ US: 41,646e(40.13*.02)=92,926 ¡ Note China now, where U.S. was in 1860-70? BUT If the long-run aggregate supply curve is vertical, how can we have economic growth? ¡ Shifts right over time ¡ Production function ¢ y=f(K L tech natural 6 ¢ y=f(K,L,tech,natural resources) ¢ Increase in L, K, tech etc ¡ Vertical means Y not func of P ¡ Potential and Actual GDP 3 Costs and Benefits of Economic Growth ¡ Benefits ¢ progress ¢ Increased output, income/ wealth...
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GROWTHCLASS - 1 Economic Growth GROWTH ¢ 3.22 real GDP...

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