101Lecture03'F'07post

101Lecture03'F'07post - Professor Bogan ECO 101 Lecture 3...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Professor Bogan ECO 101 Lecture 3 PRODUCTION POSSIBILITIES, POSITIVE ECONOMICS AND TESTING THEORIES WITH ECONOMETRICS, SCHOOLS OF ECONOMIC THOUGHT
Background image of page 1

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

View Full DocumentRight Arrow Icon
2 The Swedish Example of the Social Welfare State Throughout the ‘60s and ‘70s, Sweden was many people’s ideal welfare state. 1950s: Roughly 25% of GDP allocated through Government By the 1990s, Government GDP allocation reached 65% Swedish welfarism seemed to work well in the ‘60s, due to a strong work ethic and national solidarity/homogeneity Then people realized they didn’t have to work and produce (e.g. unemployment insurance that pays 90% of previous wages for 300 to 450 working days)
Background image of page 2
3 What happened to Sweden? The welfare state tends to break down individual work effort Since 1960, private Swedish companies have expanded abroad (e.g. Poland, Russia) but not in Sweden. Why? Post-1960 net increase in Swedish employment was from Government hiring of women , largely hired to provide social services such as elder and child care. But note: Scandinavians in general are happier with their lives, maybe their welfare programs are contributing
Background image of page 3

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

View Full DocumentRight Arrow Icon
4 Swedish Renaissance? Sweden’s emphasis on education and English is paying off in the internet world. 1999 the Swedish economy grew well In 2005 2d quarter real GDP growth at an annual rate was 2.2%. Unemployment was 6.9% up from 5.6% in 2004.
Background image of page 4
5 The Simplest Macro Model The Production Possibility Frontier Clothing Food Opportunity Cost 0 60 2 10 58 6 20 52 12 30 40 15 40 25 25 50 0 Clothing vs. Food 60 58 52 40 25 0 0 10 20 30 40 50 60 70 0 10 20 30 40 50 60 Clothing Note increasing opportunity cost
Background image of page 5

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

View Full DocumentRight Arrow Icon
6 The Simplest Macro Model — 2 The PPF takes several things as given: 1) Labor Force (size and level of human capital) 2) Capital Efficiency is defined as being on the PPF 4) Technology 5) Political-Economic System 3) Natural Resources An offshore oil platform in the UK sector of the North Sea.
Background image of page 6
7 The Simplest Macro Model — 3 The simple PPF model makes important points:
Background image of page 7

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

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/08/2008 for the course ECO 101 taught by Professor Elizabethc.bogan during the Fall '08 term at Princeton.

Page1 / 23

101Lecture03'F'07post - Professor Bogan ECO 101 Lecture 3...

This preview shows document pages 1 - 8. Sign up to view the full document.

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