Chapter_10 - Chapter 10: Long Run Economic Growth Economic...

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Chapter 10: Long Run Economic Growth Economic growth over time and around the world Not much growth until the industrial revolution. Our ancestors were hunting and gathering. The production was limited to food, clothing, shelter and tools. Their production was just enough to sustain their lives. This more or less continued until about 1300 AD. After that date life standards started to get improved. After the Industrial Revolution, world has observed big time economic growth.
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Small differences in growth rates lead to large differences in levels in the long run The difference between 1% and 2% seems small, but over long periods of time this makes a very large difference. This is due to compounding. Example: Years Growth Rate 0 1 2 5 10 100 200 1,000 1% 100 101 103 108 120 324 2,367 49,610,162 2% 100 102 106 117 143 1,035 54,307 21,628,499,069,796 3% 100 103 109 127 170 3,272 1,208,474 8,307,343,365,260,190,000 Why do we care about economic growth? Because, economic growth translates into rise in the average living standards: Life expectancy and income:$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=30;stl=t;st=f;n sl=t;se=t$wst;tts=C$ts;sp=5.59290322580644;ti=1879$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAVuy j1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=phAwcNAVuyj2tPLxKvvnNPA;by=ind$inc_s;uniValue =8.21;iid=phAwcNAVuyj0XOoBL%5Fn5tAQ;by=ind$inc_c;uniValue=255;gid=CATID1;by=grp$map_x;scale =log;dataMin=295;dataMax=79210$map_y;scale=lin;dataMin=19;dataMax=86$map_s;sma=49;smi=2.65 $cd;bd=0$inds=;modified=75 Child Mortality:$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=30;stl=t;st=t; nsl=t;se=t$wst;tts=C$ts;sp=4.67741935483871;ti=1990$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAV uyj1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=0ArfEDsV3bBwCcGhBd2NOQVZ1eWowNVpSNjl1c 3lRSWc;by=ind$inc_s;uniValue=8.21;iid=phAwcNAVuyj0XOoBL%5Fn5tAQ;by=ind$inc_c;uniValue=255;gi d=CATID1;by=grp$map_x;scale=log;dataMin=1438;dataMax=45906$map_y;scale=log;dataMin=1.7;data Max=682$map_s;sma=49;smi=2.65$cd;bd=0$inds=;modified=62 democracy:$majorMode=chart$is;shi=t;ly=2003;lb=f;il=t;fs=11;al=30;stl=t;st=t; nsl=t;se=t$wst;tts=C$ts;sp=3.6341935483871;ti=1960$zpv;v=0$inc_x;mmid=XCOORDS;iid=phAwcNAVuy j1jiMAkmq1iMg;by=ind$inc_y;mmid=YCOORDS;iid=p7mVTH%5F9OzWHQ2J6f54LXXA;by=ind$inc_s;uniV
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This note was uploaded on 08/21/2011 for the course ECON 2010 taught by Professor Roussel during the Spring '08 term at LSU.

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Chapter_10 - Chapter 10: Long Run Economic Growth Economic...

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