Growth- empirical facts Flashcards
Which types of GDP is best for measuring growth
real because it accounts for inflation
Growth
observed evolution of real GDP per capita both within and across countries over the course of decades or even centuries
Business cycles
provides insight into the observed evolution of real (GDP) either aggregate or per capita) mostly within a particular country over the course of a particular amount of time
what is rule of 70
number of years it takes for country to double its production
what happened around 1820 historically that could have impacted growth
industrial revolution
what happens if you keep giving machines but don’t improve the technology
it will not be beneficial forever; there is more capital at a decreasing rate
what is convergence
the cross country difference of a particular variable (like GDP per capita) decreases/tends to be zero as time passes
-country catches up
what is divergence
cross country difference of a particular variable (like GDP per capita) increases as time passes
-gap between countries increases
what is heterogeneity
differences in capital assets, livelihoods, income, and other economic endowments
-such as countries experiencing a decline in comparison to the US
why might countries accumulate more capital, what is the issue with this
in hopes it will help produce more per person but this is just correlation. Correlation does not equal causation
factors that impact growth
technology and capital
why has the US managed to stay at the top in terms of growth
because of improvement of technology
technology vs
measure of igborance
why might technology be compared to a measure of igborance
because we do not understand why some countries use tech more/less efficiently
what is arguably the major driver of a countries output per capita
technology
why do patents exist
for the sake of profitability to encourage people to come up with new ideas
labors contribution to growth/development
small
capitals contribution to growth/development
high (but: decreasing marginal product)
tech/TFP contribution to growth/development
high
what can we contribute to the US being the front of the frontier of economic growth for so long
to the leadership in technological advancement
what does a business cycle focus more on
labor
why can tech and capital not be pulled apart
because to use new tech you have to buy new capital
