Week%205%20Lecture%20-%20HO

Week%205%20Lecture%20-%20HO - Economic Growth Through...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Economic Growth Guns Butter 0 PPF0 Through economic growth, our production possibilities increase.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Saving and Investment FIRMS HOUSEHOLDS GOODS MARKET FACTOR MARKETS FINANCIAL MARKETS Goods and Services Produced Consumption (C) Investment (I) $ $ $ $ $ $ $ $ Labor and Land Capital Interest And Dividends Wages and Salaries Rents Stocks and Bonds $ $ Saving (S)
Background image of page 2
Saving, Investment, and Growth Consumer Goods Capital 0 C A IA A New Capital (K) Increases in Capital (K) are made possible through saving.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Aggregate Production Function 0 Y = F(N, K, Tech, R)
Background image of page 4
Constant Returns to Scale (CRS) For given levels of natural resources (Land) and Technology, we have: Y = F(N,K)
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Per-capita Production: y = f(k) We have constant returns to scale if for any constant  > 0: Y = F(N,K) Suppose  = 1/N, or one divided by the number of workers (N):
Background image of page 6
Cobb-Douglas Production Function 1- Y = AK N α Economists make frequent use of the Cobb – Douglas Production function when they do empirical studies of economic growth:
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Diminishing Marginal Productivity of Capital Per Capita Output (y) Per Capita Capital (k) 0 y = f(k)
Background image of page 8
Solow’s “Balanced Growth” Model Robert Solow Nobel Price in Economics: 1987 (Economic Growth)
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 23

Week%205%20Lecture%20-%20HO - Economic Growth Through...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online