Lec15-_Ch10_Ch11-I_-ECON2123-LI-fa13-stu

2 since 1950 in the united states by a factor of 44

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Unformatted text preview: ates, by a factor of 4.4 in France, and by a factor of 11.2 in Japan. These numbers show what is sometimes called the force of compounding. e.g. Suppose the annual growth rate is 1% per year. This would lead, after 40 years, to a standard of living 48% higher than its initial state. 1X(1+0.01)40 -1=1.48-1=48% 12 Macroeconomics by Yao Li 10.2 GROWTH IN RICH COUNTRIES SINCE 1950 The Convergence of Output per Person since 1950 Figure 10 - 2 Growth Rate of GDP per Person since 1950 versus GDP per Person in 1950, OECD Countries Countries with lower levels of output per person in 1950 have typically grown faster. The convergence of levels of output per capita across countries is not specific to the four countries we are looking at, it also extends to the set of OECD countries. 13 Macroeconomics by Yao Li 10.3 A BROADER LOOK AT GROWTH ACROSS TIME AND SPACE Looking at Growth Across Two Millennia There is agreement among economic historians about the main economic evolutions over the last 2,000 years: From the end of the Roman Empire to roughly the year 1500, there was essentially no growth of output per person in Europe. From about 1500 to 1700, growth of output per person turned positive, about 0.1% per year. It increased to 0.2% per year from 1700 to 1820. This period of stagnation of output per person is often called the Malthusian era. Europe was in a Malthusian trap, unable to increase its output per person. On the scale of human history, the growth of output per capita is a recent phenomenon. 14 Macroeconomics by Yao Li 10.3 A BROADER LOOK AT GROWTH ACROSS TIME AND SPACE Looking at Growth Across Many Countries Figure 10 - 3 Growth Rate of GDP per Person since 1960 versus GDP per Person in 1960 (2000 dollars) for 70 Countries There is no clear relation between per person the growth rate of output since 1960 and the level of output per person in 1960. 15 Macroeconomics by Yao Li 10.3 A BROADER LOOK AT GROWTH ACROSS TIME AND SPACE Looking at Growth Across Many Countries Looking at patterns by groups yields three main conclusions: 1. Nearly all OECD countries start at high levels...
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This note was uploaded on 03/05/2014 for the course ECON 2123 taught by Professor Yanyu during the Fall '13 term at HKUST.

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