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Recitation_notes_1 - W3213 Intermediate Macroeconomics Prof...

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W3213: Intermediate Macroeconomics Prof Xavier Sala-i-Martin Prepared by: T. Lan Nguyen September 23, 2009 Economic Growth Overview Some growth trends over the last few decades 1. Asian countries (China, India) are growing very fast and the poverty rate is declining in these countries 2. Africa, on the other hand, has very low growth rate and around 40% of the population is living under $1/day. Africa needs to double its growth rate to cut poverty level in half 3. More disturbing fact is that only in Africa do the number of poor people increase. 4. Latin America is sort of stagnated. 5. No systematic convergence in income and growth 6. Income inequality has been falling For more facts and reading, check Courseworks/Class Files/TA folders/Madhura Solow-Swan model of growth Production Function The production function can be presented by an equation of the form Y = F ( K t ; L t ; A t ) where K t denotes capital, L t denotes labor and A t denotes technology. For now, we can assume that A t is constant over time and we can write Production Function in the form Y = AF ( K t ; L t ) Characteristics of goods ° Rival goods : Goods that cannot be consumed by more than one person or °rm. A good can only be rival or non-rival. ° Examples: labor, a cookie. ° Excludable goods: Type of goods that you can prevent people from consuming. It is a con- tinuous concept, a matter of degree. We can compare the level of excludability among goods 1
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