ECON-UA 323: ECONOMIC DEVELOPMENT
Assignment # 1
Due: February 2, 2017
[Use the spreadsheet posted on the Classes page to solve these questions1]. For the purpose of
this assignment, pick one developing country. For each question, write your final answer
Stochastic Models of Technological Change
Part A
NYU-Stern Mini-course
September, 2011
Robert E. Lucas, Jr.
These notes are based on
Fernando Alvarez, Francisco Buera, and Robert E. Lucas, Jr. Models of
Idea Flows. NBER WP # 14135, July, 2007.
See also
Alternative Specification
A gH i cH i max j A j A i t
A
A i t
A m 0e gH m t A i t
gH i cH i
A i t
A i t A i 0 A m 0e gH i cH i t A m 0e gH m
cH i
cH i gH m gH i
A i 0 A m 0 gH i cH i gH m t
e
A m 0
since gH i cH i gH m 0.
Catch up! Asymptotical
ECON-UA 323: Economic Development
Lecture 3 - Solow Model
Martin Rotemberg, NYU
Spring 2017
Today
Last class we covered some early theories of growth
Malthus: Growth is impossible, because well just eat what
we make
Rostow: Qualitative description of s
ECON-UA 323: Economic Development
Lecture 2 - The Evolution of Thought on Poverty Reduction,
Development and Growth
Martin Rotemberg, NYU
Spring 2017
Today
Last class we covered some facts about growth
Today we talk about how people have talked about it
ECON-UA 323: Economic Development
Lecture 1 - Introduction
Martin Rotemberg, NYU
Spring 2017
Today
Course Structure: Overview
A quick overview of economic development
The course
Material is designed for Economics majors who have taken
two semesters (ea
ECON-UA 323: Economic Development
Lecture 14 - Risk and Insurance
Martin Rotemberg, NYU
Spring 2017
Where we are
Per capita GDP
y = Ak h1
This week: k
Last class (wrapping up today): Credit
Today: Risk & Insurance
Does Financial Access Matter?
Readin
ECON-UA 323: Economic Development
Lecture 13 - Credit
Martin Rotemberg, NYU
Spring 2017
Where we are
Per capita GDP
y = Ak h1
Before the midterm, looked at h
health
education
What are the returns, and what determines investment
choices
Next two week
ECON-UA 323: Economic Development
Lecture 15 - Savings
Martin Rotemberg, NYU
Spring 2017
Where we are
Per capita GDP
y = Ak h1
This week: k
Last class (wrapping up today): Risk
Today: Savings
Sharecropping (Stiglitz 1974)
A model of risk and moral ha
Scale effects
Lucas:
Human capital accumulation:
h 1 u
h
Romer:
Research Sector:
A H a
A
Charles I Jones, "Time Series Tests of
Endogenous Growth Models;" QJE, v. 110,
1995, 495-525
Mankiw, Romer and Weil, QJE 1992,
407-437
SOLOW
Y K AL 1
Y
K
y AL , k AL
In Aghion-Howitt book, page 57:
Poisson Process modeled as:
Cumulative distr. for event before T
FT 1 e T
fT e T Density
gx prob. that x events occurs in the inteval
x e
x!
1
Final product:
y Ax , 1
p t A t x t 1
because intermediate good price is its
Some Models of Technological Change
Part B
NYU-Stern Mini-course
September, 2011
Robert E. Lucas, Jr.
These notes are based mainly on
Robert E. Lucas, Jr. Ideas and Growth. Economica, 76 (2009): 1-19.
1. Introduction
Model economies discussed in Part A
Name: _
ECON-UA 323: ECONOMIC DEVELOPMENT
Assignment # 2
Due: February 16, 2017
Please submit a (stapled) hardcopy of this assignment at the start of class on the due date. Please
show your work where applicable
1. How quickly will a country growing at 10
Name: _
ECON-UA 323: ECONOMIC DEVELOPMENT
Assignment # 4
Due: March 30, 2017
Please submit a (stapled) hardcopy of this assignment at the start of class (12:30pm) on the due
date. Please show your work where applicable. Feel free to type your answers if y
BARRO and SALA-I-MARTIN: JOEG,1997
Production
Ni
Y i A i L i 1 X ij
i 1, 2
j1
Output Expenditures
Ni
Y i C i X ij RD
j1
C i and X ij require one unit of Y i . Invention
of new variety requires i .
Assume N 1 0 N 2 0 , and new
discoveries occur in country
Notes on Control Theory
t
max ft, xt , ut dt
t
1
#
0
x gt, xt , ut
t 0 , t 1 , xt 0 x 0 fixed, t 1 can be .
xt 1 may be free or fixed
The choice variable is a function ut which
is piecewise continuous, that is we are
allowed to choose ut from the set of
More on Convergence
Y fK, HL , L 1, H0 ,
Ht e t , y i
y i t
y i 0
Y i t
Ht
Y i 0
y i T
n
y i 0
1 n Y i T
T
Y i 0
Y i t
Ht
K
f H , L fk, L
Y i t
e t
Y i 0
Y i t t
e
Y i 0
Y i T
n
Y i 0
y T
n i
y i 0
T
1
T
But since from convergence
1
ROMER-JPE 1990
x(i) are intermediate goods. Capital is given by:
K=n
ZA
x (i) di
0
Note that the sum of x (i) does not add up to K : there is a proportionality
factor n: Final good production:
Y = Hy L
ZA
x(i)1
di
0
L is labor and set to unity. Human Ca
The Lucas-Baseline Model Described: Poisson arrivals
What happens in a meeting?
Agent (a draw z from Fz, t meets another, z .
Not symmetric: z is active, learns from meeting, but z is passive.
If z z, nothing happens; if z z agent z adopts z
How do pe
0.1
Lucas 1988 JME-On the Mechanics of Development
max
c(t)
Z
1
c
0
subject to:
1
1
N (t) et dt
A
N c + K = AK N 1 ,
=
A
1
1
c
H =N
+ AK N 1 N c
1
where c is consumption, N is labor force that grows at the rate , K is physical
capital, is a positive dis
ECON-UA 323: ECONOMIC DEVELOPMENT
Final Paper
Due: April 25, 2017
Complementarities (and therefore poverty traps) arise in a variety of situations. In class, we have
discussed several, including the relationship between wages, nutrition, and ability to wo