Econ II Flashcards
Session 0-1
Economic Growth
Long-term increase of economic activity.
Measured in GDP p.c. over decades/centuries.
Session 1
Malthusian Era
**Pre-1700s.
**
In this era productivity growth from technoligal progress was eaten by population growth.
Session 1
Divergence Era
**17th Century to 1970s
**
England first experienced sustained growth in 17th Century, then Industrial Revolution and other ideas changing productivity emerged.
Western economies grow exponentially, differences in living standards and productivity increase, ratio of richest to poorest nations grows.
Session 1
Convergence (Partial)
1970s - Today
Hockey-stick sustained growth, with GDP p.c. increasing 15-fold since 1900s. New Kaldor factors include globalization, higher income, increase in human capital, among other.
Developing economies catch up to the West, partially, especially in Asia, and global inequality declines.
Session 1
Frontier & spreading
Two types of growth, assuming goods are traded, ideas spread, capital invested, people migrating, etc.
1. Growth at the frontier: from the most advanced economy, US
2. Growth throughout the world: catching up, technological diffusion, exploitation, convergence/divergence.
Session 2
Growth Accounting
When the growth rate of output (or GDP) p.c. can be decomposed into the growth rate of its inputs (A, K, L).
Session 2
Interpreting TFP
Makes sense if you are aware of which other factors are accounted for:
* → “A measure of our ignorance”(Abramovitz 1956)
* Or as compound measure of all factors that we omitted
Session 2
Capital
Labor capital (humans)
Produced capital (machines, vehicles, infrastructure, etc.)
Session 2
Investment
Goods and services devoted to the production of new capital, rather than consumed.
Session 2
Productivity
Amount of output produced with each unit of capital.
Session 2
Technology
Available knowledge about how inputs can be combined to produce outputs.
Eg. R&D, knowledge sharing, scientific prog
Session 2
Efficiency
How available technology and inputs into production are actually used producing output.
Eg. Organization of the economy, institutions
Session 2
What makes a country richer?
- Differences due to factor accumulation
- Differences in technology
- Differences in efficiency
Session 6
Natural Experiments
Like an experiment (random treatment, control group),
but unintentional eg. Korea in the 1970s or Germany during the Wall.
Growth divergence originates from how the economy is organized through institutions.
Session 6
Institutions
Institutions are “the rules of the game in a society or, more formally, are the humanly devised constraints
that shape human interaction” (North 1990)
- PoliSci: mean courts, civil liberties, rule of law, system of gov’t., etc.
- Economists: influence over private return to produce activities and social return of activities.
