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lecture5 - Previously Solow III Summary Economics 2...

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Previously Solow - III Summary Economics 2: Growth (Solow Model -III: Technology) c Kumar Aniket Lecture 5, Week 8 c Kumar Aniket Economics 2: Growth (Solow Model -III: Technology)
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Previously Solow - III Summary Last Lecture With positive population growth, the model predicts that economy’s capital stock and output grow at the rate n X capital stock per worker and output per worker do not grow c Kumar Aniket Economics 2: Growth (Solow Model -III: Technology)
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Previously Solow - III Summary Last Lecture With positive population growth, the model predicts that economy’s capital stock and output grow at the rate n X capital stock per worker and output per worker do not grow Solow - II gives us steady state growth of capital stock and output Empirically we observe that the output per worker and capital stock per worker grows at a positive rate which Solow - II cannot explain. c Kumar Aniket Economics 2: Growth (Solow Model -III: Technology)
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Previously Solow - III Summary Definitions Fundamental Equation -III Steady-State Convergence Dynamics Solow Model - III Definition (Solow Model III) Solow model with positive population growth and technological progress. Assumption a) Positive population growth Δ L L = n > 0 b) Positive technological progress Δ A A = g > 0 c Kumar Aniket Economics 2: Growth (Solow Model -III: Technology)
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Previously Solow - III Summary Definitions Fundamental Equation -III Steady-State Convergence Dynamics Technology in Solow Growth Model Definition (Labour-augmenting Technology) Y = F ( K , AL ) technological progress occurs when A increases over time a unit of labour becomes more productive with technological progress (as A increases) What happens to the production function as A increases? c Kumar Aniket Economics 2: Growth (Solow Model -III: Technology)
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Previously Solow - III Summary Definitions Fundamental Equation -III Steady-State Convergence Dynamics Effective Units Definition (Effective Units of Labour) AL is defined as the efficiency units of labour. c Kumar Aniket Economics 2: Growth (Solow Model -III: Technology)
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Previously Solow - III Summary Definitions Fundamental Equation -III Steady-State Convergence Dynamics Effective Units Definition (Effective Units of Labour) AL is defined as the efficiency units of labour. Labour augmenting technological progress implies more effective units of labour available in the economy. c Kumar Aniket Economics 2: Growth (Solow Model -III: Technology)
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Previously Solow - III Summary Definitions Fundamental Equation -III Steady-State Convergence Dynamics Effective Units Definition (Effective Units of Labour) AL is defined as the efficiency units of labour.
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