Eighth Week of Notes
Eighth Week of Notes ECON2020
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This 2 page Class Notes was uploaded by Morgan Genelin on Sunday April 3, 2016. The Class Notes belongs to ECON2020 at University of Colorado taught by Murat Iyugan in Winter 2016. Since its upload, it has received 33 views. For similar materials see Principles of Macroeconomics in Economcs at University of Colorado.
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Date Created: 04/03/16
NOTES March 8, 2016 Economic Growth 1. Facts: the world income distribution is very unequal a. Effects life expectancy the poor die earlier b. Recent Phenomenon i. Within countries not just between 1. Driving force in politics ii. GDP growth averages 1%2% per year (in person and real terms) 2. Rule of 70 (a good rule of thumb) a. Trying to understand how long it would take the GDP to double 70 b. AnnualGrowthRate =nubmer of yearsittakes¿double 3. Sources of long run economic growth a. We need the workers (L) b. Physical Capital (K): human resources such as buildings and machines c. Human Capital (H): the improvement in labor created by the education and knowledge embodied in the workforce d. Natural Resources (N) e. Technology (T) f. Rule of Law: Institutions and policies All combine to determine labor productivity o Aggregate production function Y K H N = f ( , ,T , ) (per capita) =T∗ f (K ,H ,L ,N) L L L L (total) Y K x L=T∗ (L) NOTES March 10, 2016 4. Growth Accounting x X y Y =T∗ K a. Take Y=T∗K ∗L to per capitaL ( L x b. Y = t*k lower case letters c. With addition of labor, it becomes: i. %ΛY = %ΛT + x%ΛK + y%ΛL 1. The x and y come from the equation in “a”