solow growth model Flashcards
effects of capital on output
Higher capital per effective worker leads to higher output per effective worker.
required investment
required investment
the investment needed to maintain a
constant level of capital.
Patents
give a firm that has discovered a new product the right to exclude anyone else from the production or use of the new prod- uct for some time.
property rights
fertility of research
how spending on R&D translates into new ideas and new products
appropriability
extent to which firms can benefit from the results of their own R&D.
growth rate of pop
gN
growth rate of tech
gA
GROWTH RATE OF EFFECTIVE LABOUR
gA + gN
INVESTMENT SAVING
I=S
RELATION 2
S=sY
RELATION 3
It=sYt
s=private saving rate (constant)
Flows
variables that have a time dimension (that is, they are defined per unit of time); Output, saving, and investment are flows.
stocks
stocks are variables that do not have a time dimension (they are defined at a point in time). Employment and capital are stocks.
Kt+1 = (1-o)Kt + It
Kt+1 =
o= rate of depreciation
Kt =
I=investment
required investment
why is the amount of r&d spending important for growth?
How do the appropriability and fertility of research affect the amount of R&D spending?
Where does technological progress come from for the economic leaders of the world?
Do developing countries have other alternatives to the sources of technological progress you mentioned in part (a)?
Examples of developing countries shows that strong laws on intellectual property rights may have positive effects on the development of a country. Explain.
assess the likely impact on the growth rate and the level of output over the next five years and over the next five decades.
a. A permanent reduction in the rate of technological progress.
