Econ303 Household Decision on Consumption and Leisure Facts on labor supply in the US
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1. The average hourly wage (real) in general increased from 1900 on. Hours per person stays more or less constant. Using the aggregate data, the average hourly wage is
Name: _ Date: _ 1. In a steady-state economy with a saving rate s, population growth n, and laboraugmenting technological progress g, the formula for the steady-state ratio of capital per effective worker (k*), in terms of output per effective worker (f(k
Fall Semester 05-06 Akila Weerapana
Lecture 11: Assessing the Solow Model with Technology
I. OVERVIEW
In the last lecture we looked at the results of some comparative static exercises using the Solow model with technology. We showed that the impact of an
Chapters 7 and 8 Solow Growth Model Basics
The Solow growth model breaks the growth of economies down into basics. It starts with our production function Y = F (K, L) and puts in per-worker terms. Y KL = F( , ) L LL y = f (k ) (1)
where k is the amount of
International Finance
Study of trade over time.
I give you a slip of paper today.
The Two-Period Model
Lecture 1
You give me goods today. I give you goods in exchange for slip of paper tomorrow.
Trade over time is no different from trade in apples and
Econ303 Solow Growth Model: Part one Solow growth model I Assumption 1 There is no technology progress and no population growth.
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Since we are talking about changes in GDP over time, we add time subscript on variables. Yt is GDP at time t, Kt capital at
The Solow Growth Model
The Solow Growth Model is a model of capital accumulation in a pure production economy: there are no prices because we are strictly interested in output = real income. Everyone works all the time, so there is no labor/leisure choice
NOTES ON SOLOWS GROWTH MODEL HAKAN YILMAZKUDAY
1. Introduction
The starting point for modern growth theory is the classical article of Ramsey (1928)1. His paper made a profound contribution to the literature about household optimization and intertemporall
1
Old Keynesian analysis
Here, we will quickly look at so-called old Keynesian analysis of macroeconomy. This was a mainstream model of macroeconomics starting 1930s until 1960s. As was explained in Chapter 1, one fundamental problem of this approach is t
Agenda
Price Adjustment and the Attainment of General Equilibrium
The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis, Part 3
13-1
13-2
General equilibrium in the AD-AS model
P LRAS
Disequilibrium in the AD-AS model
Equilibrium in the
Keynesian IS-LM Keynesian
The Keynesian System (II): Money, Interest, and Income
Problems with the Problems Income-Expenditure Model Income
!
What about prices?
Dont they change when AS and AD conditions change? Dont they have an influence?
Are firms re
Monetary Theory ISLM and Monetary Policy Policy Makers (IMF, US Treasury) can use the ISLM model to determine what happens to interest rates and output when they increase/decrease the money supply. Before we continue, we look at factors that cause the IS
Cooleconomics.com
macro-study-ISLMFE
Cooleconomics.com Macroeconomics Study Question: IS-LM Model with Full Employment Line (Answers on subsequent pages) 1. A closed economy is humming along a full employment GDP, but Congressman Swelled Head says Lets cu
Cooleconomics.com
macro-ISLM1
Cooleconomics Macroeconomics A Short Run Model of a Closed Economy: the IS-LM model Equilibrium in a closed economy (no NX) in the short run: In short run equilibrium, two important conditions are met: !" Condition 1. real Ag
The Closed Economy
How the real interest rate keeps the goods market in equilibrium Y = C + I(r) + G
Model Background
This model is closed in the sense that there are no
exports or imports in the model. The model does include government tax and governmen
Econ303 A Simple Model of GDP Determination We make the following assumptions Assumption 1 All countries use the same technology, Y = F (K, L). Assumption 2 The supplies of labor and capital are exogenously given.
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Let Ls denote the supply of labor and
A simple model of GDP determination
Specification of an economy
Technology: Y=F(K,L)
F(K,L)=10K0.3L0.7
Many identical firms demands labor and capital
Representative firm Aggregate demand are Kd and Ld
Growth
Firms behave competitively in both labor and
Econ303 Why only some people go to work? Income eect
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Income eect is what happens if there a parallel shift of the budget line (The intercept of the budget line is changed but the slope stays the same). The tangency point of the new budget line to a dier
Lecture 5
Economic Growth: the Solow Model
Eric Doviak Economic Growth and Economic Fluctuations
Why Study Economic Growth?
Is there some action a government of India could take that would lead the Indian economy to grow like Indonesias or Egypts? If so,
Econ303 A One Period Macroeconomic Model Competitive Equilibrium Revisited
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In the previous lecture we did not talk about the demand of labor and the determination of the wage rate. To explain the observed fact that there is a huge increase of the wage r
Econ303 Exam I
Summary of formulas
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This is to help you review materials. It is not allowed during exam. 1. Production function Y = F (K, L) 2. Marginal product: marginal contribution of input. 3. Cobb-Douglas production function Y = AK L1 M PK = AK 1 L
Econ303 Solow Growth Model: Part one Solow growth model I Assumption 1 There is no technology progress and no population growth.
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Since we are talking about changes in GDP over time, we add time subscript on variables. Yt is GDP at time t, Kt capital at
Econ303 Solow Growth Model: Part Two Empirical success of the Solow growth model The Solow growth model predicts the following:
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1. A country with high investment (or saving) rate enjoys high GDP per capita in the long run. 2. Two countries with the same
Econ303 Solow Growth Model: Part Three Two puzzles 1. Growth of capital and labor can not fully account for the growth of GDP in the US.
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Based our model of GDP determination, the output at time t is determined by capital and labor input and the technolo