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ECON 101 Module 5 B PPT With Notes
ECON 101 Module 5 B PPT With Notes
macroeconomics
fifth edition
N. Gregory Mankiw
PowerPoint® Slides
prepared by Ming-Jang Weng
K K L E
= ( )
LE LE L E
L E
s f ( k ) k k ( n g ), where n , and g
L E
k s f ( k ) ( n g ) k
( +n +g ) k
sf(k)
Capital per
k*
effective
CHAPTER 8 Economic Growth II worker, k slide 10
Steady-State Growth Rates in the
Solow Model with Tech. Progress
Steady-state
variable symbol
growth rate
Capital per
effective worker
k = K/ (L E ) 0
Output per
effective worker
y = Y/ (L E ) 0
Capital per
k *
gold effective
CHAPTER 8 Economic Growth II worker, kslide 14
1. Evaluating the Rate of Saving
Use the Golden Rule to determine whether
our saving rate and capital stock are too high,
too low, or about right.
To do this, we need to compare
(MPK ) to (n + g ).
If (MPK ) > (n + g ), then we are below the
Golden Rule steady state and should increase s.
If (MPK ) < (n + g ), then we are above the
Golden Rule steady state and should reduce s.
To determine , divided 2 by 1:
k 0.1 y 0.1
k
2.5 y
0.04
2.5
Oil prices
Oil shocks occurred about when productivity
slowdown began.
– But: Then why didn’t productivity speed up
when oil prices fell in the mid-1980s?
We
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isisthe
thetrue
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it’sprobably
probablyaacombination
combination
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ofseveral
severalof
ofthem
them..