Chap 2 economic growth Flashcards
(13 cards)
What does the Hockey cross graph represent?
IR and the huge increasing in GDP per capita
Def the production function and give its characteritics
prod function= how output Y is produced using inputs (L and A)
- increasing
- concave
What implies decreasing returns principle in terms of production?
- average prod. decreasing
- marginal prod decreasing.
Why decreasing returns?
Increasing an input in the production process (all else equal) lowers its productivity. FARMERS EXEMPLE
Describe the Malthusian model and the Malthusian trap.
- if consumption above sub. level, pop grow
=> Population growth dilutes any increase in living standards. MALTHUSIAN TRAP - if cons. under sub. level, pop. decrease.
How to escape the Malthusian trap?
Rapid tech. growth. (faster than pop growth)
What does the Cobb-Douglass function measure and what is it?
The efficiency of capital/tech association.
𝑨.𝑲𝜶.𝑳𝟏-𝜶 ou 𝒚=𝑨𝒌𝜶 avec 𝜶 part du capital dans la production.
Capital accumulation formula?
𝑲𝒕*𝟏 =𝑲𝒕 +𝑰𝒕 −𝜹𝑲𝒕 or 𝒌𝒕”𝟏−𝒌𝒕=𝒔𝑨𝒌𝜶𝒕 −𝜹𝒌𝒕
Why according to the Sollow model long term growth is = 0?
Capital production reach a steady state because investment has diminishing returns.
Why according to the Sollow model long term growth is = 0?
Capital production reaches a steady state because investment has diminishing returns + depreciation = still capital stock and growth rate is 0.
What implies convergence(sollow model)? x3
- LONG-TERM GROWTH CAN’T BE EXPLAINED BY CAPITAL ACCUMULATION=> tech. progress.
- Saving rate doesn’t affect the growth rate but is related to the level of GDP per capita (and capita accumulation)
- The Sollow model expects poor countries to catch up with the rich countries.
What is the contribution of each variable in production?
gY= gA + 1/3 gK + 2/3 gL
Comment expliquer les différences de richesses entre pays aux mêmes caractéristiques ?
différence de TFP, dans la productivité totale des facteurs de production.
