101Lecture5F'07post

101Lecture5F'07post - Professor Bogan ECO 101 Lecture 5...

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Professor Bogan ECO 101 Lecture 5 Theories of growth: 1) Neoclassical (Cobb-Douglass production function) 2) Endogenous growth theory Possible reasons for slower American growth in ‘70s and early ‘80s and early ‘90s or approx.1973-1993
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2 Questions about US Economic Growth (repeat) In the ‘70s and ‘80s Americans worried about our slow economic growth There were 2 main concerns I. The US grew less in the ‘60s and ‘70s than other industrialized nations (LAST LECTURE) II. The US grew more slowly in the ‘70s, early ‘80s and then again in the early ‘90s than from 1948-1973 when real GDP growth averaged 3.7% per year GDP growth averaged 2% from 1973-1991
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3 II. From ‘73 to early ‘90s U.S. Growth Slowed From Earlier Levels In the ‘70s, ‘80s, and early ‘90s, growth was slower than at other times in our history. GROWTH IN OUTPUT PERSON Y N ( ) 1948 - ‘73 ‘73 - ‘91 3.0 % 2.0% ( Y L GROWTH IN LABOR PRODUCTIVITY ) 1879-1979 ‘48 - ‘73 ‘73 - ‘95 2.3% 3.0% 1.0%
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4 US growth returned in ‘90s and after a recession in 2001 Real GDP grew 2.2% in 1995, 4.1% in 1996, 4.3% in 1997, 4.8% in 1998, 4.4% in 1999, 3.8% in 2000, 3% in 2001, 2.4% in 2002, 4% in 2003, 3.9% in 2004, 3.2 ‘05, 3.4% in ‘06 {Computers, the internet, biotech, the peace dividend from the fall of communism, good US fiscal and monetary policy} Unusually, labor productivity remained high in the recession of 2001 and in the recovery. Increases in labor productivity in non- farm businesses averaged: 4.8% in 2001-2002 4.4% in 2002-2003 4% in 2003-2004. Employment increased slowly following the recession as existing workers raised output.
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5 In the 1960s, 1970s and 1980s Japan was a powerhouse of economic growth. In 1990 Japanese growth essentially stopped until ‘04 Japan had little growth and frequent recessions from 1990 until 2004. (In the past decade: recession in ‘97-’98 and then in the second half of ‘99 into ‘00, and again in 2001-2002) High levels of savings 50s-mid’80s found outlet in I (catch up — copy), then in financing X . But Japanese export growth faced competition from
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101Lecture5F'07post - Professor Bogan ECO 101 Lecture 5...

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