Updated lectures notes for chapte 9 long run economi +growth

Updated lectures notes for chapte 9 long run economi...

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1 of 52 Comparing Economies Across Time and Space Real GDP per capita (log s cale) $100,000 10,000 1,000 1907 1920 1930 1940 1950 1960 1970 1980 1990 2000 2007 Year
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2 of 52 Real GDP per Capita Year Percentage of 1907 real GDP per capita Percentage of 2007 real GDP per capita 1907 100% 16% 1927 129 21 1947 175 28 1967 283 46 1987 430 69 2007 620 100
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3 of 52 Income Around the World, 2007
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4 of 52 Growth Rates The Rule of 70 tells us that the time it takes a variable that grows gradually over time to double is approximately 70 divided by that variable’s annual growth rate.
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5 of 52 Growth Rates United States 10% 8 6 4 2 0 -2 Average annual growth rate of real GDP per capita, 1980-2007 Ireland Argentina France 4.1% 2.0% 1.5% 0.8% -1.4% 8.7% China India Zimbabwe 4.1%
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6 of 52 ►ECONOMICS IN ACTION India Takes Off India achieved independence from Great Britain in 1947, becoming the world’s most populous democracy—a status it has maintained to this day. Despite ambitious economic development plans, India’s performance was consistently sluggish. In 1980, India’s real GDP per capita was only about 50% higher than it had been in 1947. Real GDP per capita has grown at an average rate of 4.1% a year, tripling between 1980 and 2007. What went right in India after 1980? Many economists point to policy reforms. For decades after independence, India had a tightly controlled, highly regulated economy. Today, things are very different: a series of reforms opened the economy to international trade and freed up domestic competition.
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7 of 52 The Sources of Long-Run Growth Labor productivity, often referred to simply as productivity, is output per worker. Physical capital consists of human-made resources such as buildings and machines. Human capital is the improvement in labor created by the education and knowledge embodied in the workforce. Technology is the technical means for the production of goods and services.
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8 of 52 Accounting for Growth: The Aggregate Production Function The aggregate production function is a hypothetical function that shows how productivity (real GDP per worker) depends on the quantities of physical capital per worker and human capital per worker as well as the state of technology.
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Accounting for Growth: The Aggregate Production Function A recent example of an aggregate production function applied to real data comes from a comparative study of Chinese and Indian economic growth by the economists Barry Bosworth and Susan Collins of the Brookings Institution. They used the following aggregate production
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Updated lectures notes for chapte 9 long run economi...

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