Intro Flashcards
What is fact 1?
Massive variation in GDP per capita levels across countries
What is fact 2?
Rates of economic growth vary across countries
What is fact 3?
Modern frontier growth has been stable
What is fact 4?
Countries can go from being poor to being rich and vice versa
What is fact 5?
Growth rates are not generally constant over time
What are level effects?
These are things that alter the intercept
What are growth effects?
Things that shift the slope, g
What are transitional effects?
Temporary spurt or decline in growth rates while a country reaches/catches up to some level
Benefit of GDP per capita?
Highly correlated with other measures of quality of life e.g life expectancy, infant mortality
What is the “right” way to value goods across countries?
Purchasing Power Parity (PPP)
What does PPP do?
Uses prices of the same standardised basket of goods and services
What is simplest continuous growth equation?
y(t)=y0e^gt
What is simplest discrete time function?
y(t) = y0 (1+g)^x
Where x=number of years
What is difference between discrete and continuous time?
With discrete time value is being compounded once annually, however with continuous time value is being compounded continuous
