Theories of Growth II

Long term growth can only arise from technological

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Unformatted text preview: some point there will be too many machines and not enough people. (machines most useful when you have none) It depends on how much capital you initially had The bigger the natural disaster, the more you fall down, so the returns on your investment are bigger. Long- term growth can only arise from technological improvement (A is a coefficient factor added before the f(K,L)). This shifts the curve upwards What technological progress does, the same amount of capital gives you more output. Maddison: wherever you see growth, there is technology in the background. Using the diminishing returns curves, in which s= sf(k) = sy (new capital coming in, so positive force), and a straight line from origin diagonally up of (d+n)k, since d is constant (depreciation eating up capital, so negative force) Where sy = (d+n)k is called a steady state, where the economy is not growing Changes...
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