growth5 - Part IIB. Paper 2 Michaelmas Term 2010 Economic...

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Unformatted text preview: Part IIB. Paper 2 Michaelmas Term 2010 Economic Growth Lecture 5: Technology and Endogenous Growth Dr Tiago Cavalcanti Readings and References Texts: (*)Jones chs. 4 & 8 Articles: Arrow K. (1962) The Economic Implications of Learning by Doing Review of Economic Studies , 29 , no.1, 155-173. Romer P. (1986) Increasing Returns and Long-Run Growth Journal of Political Economy , 94 , no.5, 1002-1037. Solow R. (1957) Technical Change and the Aggregate Production Function Review of Economics and Statistics, 39 , 312-320. Solow (1957): decompose output changes into input change and technological change take natural logarithm of Y t = B t F(K t , L t ) and differente w.r.t. time L L Y wL K K Y rK B B Y L L Y Y K K Y B B Y Y g Y + + = + + = = L L K K B Y g g g g + + = CRS assumptio n Growth Accounting captured by term B represents technology TFP growth rate can be measured indirectly, as residual growth in output not explained by changes in input factors L L K K Y B g g g g -- = g B known as the Solow residual Total Factor Productivity (TFP) TFP = residual term, picks up everything that has impact on output - other than changes in recorded factor inputs, including Improvements in production techniques (technological change) Institutional changes...
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This note was uploaded on 06/04/2011 for the course ECONOMICS paper 2 taught by Professor Prado during the Spring '11 term at Cambridge.

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growth5 - Part IIB. Paper 2 Michaelmas Term 2010 Economic...

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