Intermediate Macroeconomics Notes Week #11
Intermediate Macroeconomics Notes Week #11 ECON 3020
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This 2 page Class Notes was uploaded by Zachary Hill on Sunday April 3, 2016. The Class Notes belongs to ECON 3020 at Tulane University taught by Antonio Bojanic in Fall 2015. Since its upload, it has received 21 views. For similar materials see Intermediate Macroeconomics in Economcs at Tulane University.
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Date Created: 04/03/16
ECON 3020 Notes for Week #11 28 March 2016 Final day of Spring Break 30 March 2016 Receive and review Midterms 1 April 2016 Total Factor Productivity ● What exactly do we mean by A, and how can countries improve their A values ● These models are endogenous 0.3 0.7 ● Y = AK L ● The best proxy for A is technological growth ● K and L are rival in nature; when you use one part of one of these factors for one thing, the same part cannot be used for another; we call such things rival objects ● Technology is nonrival; it can be utilized by many people in many places at the same time ● Traditional factor inputs are excludable; the owner of K and L can exclude others from using it unless they pay for it ● Technology has a very low excludability; it can be seen in some cases as nonexcludable ● As a result, investment in R&D in the private technology sector is low because new technology can easily be accessed due to its low excludability (whether through legal or illegal means) ● What can be done to increase productivity and technology? ○ Infrastructure ■ Electricity, roads, sanitation and sewer systems, etc. are essential for creating conditions in which A can grow ○ Human capital improvements ■ Investment in human capital, such as education investment, allows people to utilize and create new technologies ○ Encouraging R&D ■ Government spending: the government directly invests money and time into the creation of new technologies ■ Tax incentives: tax incentives in the private sector are meant to incentivize investments in R&D there, giving tax breaks to those that invest or take part in R&D in the private sector ■ Patents: the claiming of an idea as one’s own; protected by the government against others attempting to use or claim said idea as their own for the length of the patent ○ Institutions needed for technological development ■ The rules, regulations, and laws of a country ■ Property rights: the most important institution; must be able to enforce legal contracts ● Common law legal system: a system in which the law is constantly being reinterpreted by judges as the society progresses; more flexible and better accommodates new technology ● Napoleonic code legal system: a system with statutes that cannot be changed and are enforced strictly; difficult for the system to accommodate changes ● Mixed legal system: a system with statutes that are constantly being changed and reinterpreted by the judges ● Countries near the equator tend to be poorer than countries in more temperate climates ○ European settles that went to warmer climates died from disease so the living few were the minority, while they survived better in more temperate climates ○ In all colonies they revised the legal system to strongly favor themselves ○ In equatorial countries they were the powerful but small upper class, while, as a larger share of the total people, they were closer to the average middle class in more temperate climates ○ These effects are still being felt today ●