2

Introduction to Modern Economic Growth

739 Pages · 2007 · 3.77 MB · English

  • Introduction to Modern Economic Growth

    Introduction to Modern


    Economic Growth


    Daron Acemoglu


    Department of Economics,


    Massachusetts Institute of Technology Contents


    Preface xi


    Part 1. Introduction 1


    Chapter 1. Economic Growth and Economic Development:


    The Questions 3


    1.1. Cross-Country Income Differences 3


    1.2. Income and Welfare 8


    1.3. Economic Growth and Income Differences 11


    1.4. Origins of Today’s Income Differences and World Economic Growth 14


    1.5. Conditional Convergence 19


    1.6. Correlates of Economic Growth 23


    1.7. From Correlates to Fundamental Causes 26


    1.8. The Agenda 29


    1.9. References and Literature 32


    Chapter 2. The Solow Growth Model 37


    2.1. The Economic Environment of the Basic Solow Model 38


    2.2. The Solow Model in Discrete Time 48


    2.3. Transitional Dynamics in the Discrete Time Solow Model 61


    2.4. The Solow Model in Continuous Time 66


    2.5. Transitional Dynamics in the Continuous Time Solow Model 71


    2.6. Solow Model with Technological Progress 79


    2.7. Comparative Dynamics 92


    2.8. Taking Stock 94


    2.9. References and Literature 95


    2.10. Exercises 97


    Chapter 3. The Solow Model and the Data 103


    3.1. Growth Accounting 103


    3.2. Solow Model and Regression Analyses 107


    3.3. The Solow Model with Human Capital 117


    3.4. Solow Model and Cross-Country Income Differences: Regression


    Analyses 125


    3.5. Calibrating Productivity Differences 135


    iii Introduction to Modern Economic Growth


    3.6. Estimating Productivity Differences 141


    3.7. Taking Stock 148


    3.8. References and Literature 150


    3.9. Exercises 151


    Chapter 4. Fundamental Determinants of Differences in Economic


    Performance 155


    4.1. Proximate Versus Fundamental Causes 155


    4.2. Economies of Scale, Population, Technology and World Growth 160


    4.3. The Four Fundamental Causes 163


    4.4. The Effect of Institutions on Economic Growth 178


    4.5. What Types of Institutions? 199


    4.6. Disease and Development 202


    4.7. Political Economy of Institutions: First Thoughts 206


    4.8. Taking Stock 207


    4.9. References and Literature 208


    4.10. Exercises 211


    Part 2. Towards Neoclassical Growth 213


    Chapter 5. Foundations of Neoclassical Growth 215


    5.1. Preliminaries 215


    5.2. The Representative Household 218


    5.3. Infinite Planning Horizon 226


    5.4. The Representative Firm 229


    5.5. Problem Formulation 232


    5.6. Welfare Theorems 233


    5.7. Sequential Trading 241


    5.8. Optimal Growth in Discrete Time 245


    5.9. Optimal Growth in Continuous Time 246


    5.10. Taking Stock 247


    5.11. References and Literature 248


    5.12. Exercises 250


    Chapter 6. Dynamic Programming and Optimal Growth 255


    6.1. Brief Review of Dynamic Programming 256


    6.2. Dynamic Programming Theorems 260


    6.3. The Contraction Mapping Theorem and Applications* 266


    6.4. Proofs of the Main Dynamic Programming Theorems* 272


    6.5. Fundamentals of Dynamic Programming 280


    6.6. Optimal Growth in Discrete Time 291


    6.7. Competitive Equilibrium Growth 297


    6.8. Another Application of Dynamic Programming: Search for Ideas 299


    iv Introduction to Modern Economic Growth


    6.9. Taking Stock 305


    6.10. References and Literature 306


    6.11. Exercises 307


    Chapter 7. Review of the Theory of Optimal Control 313


    7.1. Variational Arguments 314


    7.2. The Maximum Principle: A First Look 324


    7.3. Infinite-Horizon Optimal Control 330


    7.4. More on Transversality Conditions 342


    7.5. Discounted Infinite-Horizon Optimal Control 345


    7.6. A First Look at Optimal Growth in Continuous Time 351


    7.7. The q-Theory of Investment 352


    7.8. Taking Stock 359


    7.9. References and Literature 361


    7.10. Exercises 363


    Part 3. Neoclassical Growth 371


    Chapter 8. The Neoclassical Growth Model 373


    8.1. Preferences, Technology and Demographics 373


    8.2. Characterization of Equilibrium 378


    8.3. Optimal Growth 383


    8.4. Steady-State Equilibrium 384


    8.5. Transitional Dynamics 387


    8.6. Technological Change and the Canonical Neoclassical Model 390


    8.7. Comparative Dynamics 398


    8.8. The Role of Policy 400


    8.9. A Quantitative Evaluation 402


    8.10. Extensions 405


    8.11. Taking Stock 406


    8.12. References and Literature 407


    8.13. Exercises 408


    Chapter 9. Growth with Overlapping Generations 417


    9.1. Problems of Infinity 418


    9.2. The Baseline Overlapping Generations Model 421


    9.3. The Canonical Overlapping Generations Model 427


    9.4. Overaccumulation and Pareto Optimality of Competitive Equilibrium


    in the Overlapping Generations Model 429


    9.5. Role of Social Security in Capital Accumulation 433


    9.6. Overlapping Generations with Impure Altruism 436


    9.7. Overlapping Generations with Perpetual Youth 441


    9.8. Overlapping Generations in Continuous Time 445


    v Introduction to Modern Economic Growth


    9.9. Taking Stock 453


    9.10. References and Literature 455


    9.11. Exercises 456


    Chapter 10. Human Capital and Economic Growth 463


    10.1. A Simple Separation Theorem 463


    10.2. Schooling Investments and Returns to Education 466


    10.3. The Ben Porath Model 469


    10.4. Neoclassical Growth with Physical and Human Capital 474


    10.5. Capital-Skill Complementarity in an Overlapping Generations Model 480


    10.6. Physical and Human Capital with Imperfect Labor Markets 485


    10.7. Human Capital Externalities 492


    10.8. Nelson-Phelps Model of Human Capital 495


    10.9. Taking Stock 498


    10.10. References and Literature 500


    10.11. Exercises 502


    Chapter 11. First-Generation Models of Endogenous Growth 505


    11.1. The AK Model Revisited 506


    11.2. The AK Model with Physical and Human Capital 513


    11.3. The Two-Sector AK Model 516


    11.4. Growth with Externalities 521


    11.5. Taking Stock 526


    11.6. References and Literature 528


    11.7. Exercises 529


    Part 4. Endogenous Technological Change 535


    Chapter 12. Modeling Technological Change 537


    12.1. Different Conceptions of Technology 537


    12.2. Science, Profits and the Market Size 542


    12.3. The Value of Innovation in Partial Equilibrium 545


    12.4. The Dixit-Stiglitz Model and “Aggregate Demand Externalities” 555


    12.5. Individual R&D Uncertainty and the Stock Market 562


    12.6. Taking Stock 564


    12.7. References and Literature 565


    12.8. Exercises 567


    Chapter 13. Expanding Variety Models 571


    13.1. The Lab Equipment Model of Growth with Product Varieties 572


    13.2. Growth with Knowledge Spillovers 586


    13.3. Growth without Scale Effects 589


    13.4. Growth with Expanding Product Varieties 593


    vi Introduction to Modern Economic Growth


    13.5. Taking Stock 598


    13.6. References and Literature 600


    13.7. Exercises 601


    Chapter 14. Models of Competitive Innovations 609


    14.1. The Baseline Model of Competitive Innovations 610


    14.2. A One-Sector Schumpeterian Growth Model 623


    14.3. Step-by-Step Innovations* 629


    14.4. Taking Stock 645


    14.5. References and Literature 646


    14.6. Exercises 647


    Chapter 15. Directed Technological Change 655


    15.1. Importance of Biased Technological Change 656


    15.2. Basics and Definitions 660


    15.3. Baseline Model of Directed Technological Change 663


    15.4. Directed Technological Change with Knowledge Spillovers 681


    15.5. Directed Technological Change without Scale Effects 686


    15.6. Endogenous Labor-Augmenting Technological Change 688


    15.7. Other Applications 692


    15.8. Taking Stock 693


    15.9. References and Literature 694


    15.10. Exercises 698


    Part 5. Stochastic Growth 705


    Chapter 16. Stochastic Dynamic Programming 707


    16.1. Dynamic Programming with Expectations 707


    16.2. Policy Functions and Transitions 707


    16.3. Few Technical Details* 707


    16.4. Applications of Stochastic Dynamic Programming 707


    16.5. Taking Stock 707


    16.6. References and Literature 707


    16.7. Exercises 707


    Chapter 17. Neoclassical Growth Under Uncertainty 709


    17.1. The Brock-Mirman Model 709


    17.2. Equilibrium Growth under Uncertainty 710


    17.3. Application: Real Business Cycle Models 710


    17.4. Taking Stock 710


    17.5. References and Literature 710


    17.6. Exercises 710


    Chapter 18. Growth with Incomplete Markets 711


    vii Introduction to Modern Economic Growth


    18.1. The Bewley-Aiyagari Model 711


    18.2. Risk, Diversification and Growth 711


    18.3. Taking Stock 711


    18.4. References and Literature 711


    18.5. Exercises 711


    Part 6. Technology Diffusion, Trade and Interdependences 713


    Chapter 19. Diffusion of Technology 715


    19.1. Importance of Technology Adoption and Diffusion 715


    19.2. A Benchmark Model of Technology Diffusion 715


    19.3. Human Capital and Technology 715


    19.4. Technology Diffusion and Endogenous Growth 716


    19.5. Appropriate Technology and Productivity Differences 716


    19.6. Inappropriate Technologies 717


    19.7. Endogenous Technological Change and Appropriate Technology 718


    19.8. Taking Stock 723


    19.9. References and Literature 723


    19.10. Exercises 723


    Chapter 20. Trade, Technology and Interdependences 725


    20.1. Trade, Specialization and the World Income Distribution 725


    20.2. Trade, Factor Price Equalization and Economic Growth 731


    20.3. Trade, Technology Diffusion and the Product Cycle 732


    20.4. Learning-by-Doing, Trade and Growth 736


    20.5. Trade and Endogenous Technological Change 736


    20.6. Taking Stock 736


    20.7. References and Literature 736


    20.8. Exercises 736


    Part 7. Economic Development and Economic Growth 737


    Chapter 21. Structural Change and Economic Growth 739


    21.1. Non-Balanced Growth: The Demand Side 739


    21.2. Non-Balanced Growth: The Supply Side 743


    21.3. Structural Change: Migration 743


    21.4. Structural Change: Transformation of Productive Relationships 743


    21.5. Towards a Unified Theory of Development and Growth 743


    21.6. Taking Stock 743


    21.7. References and Literature 743


    21.8. Exercises 743


    Chapter 22. Poverty Traps, Inequality and Financial Markets 745


    22.1. Multiple Equilibria From Aggregate Demand Externalities 745


    viii Introduction to Modern Economic Growth


    22.2. Human Capital Accumulation with Imperfect Capital Markets 754


    22.3. Income Inequality and Economic Development 761


    22.4. Financial Development and Economic Growth 761


    22.5. Taking Stock 761


    22.6. References and Literature 761


    22.7. Exercises 761


    Chapter 23. Population Growth and the Demographic Transition 763


    23.1. Patterns of Demographic Changes 763


    23.2. Population and Growth: Different Perspectives 763


    23.3. A Simple Model of Demographic Transition 763


    23.4. Exercises 763


    Part 8. Political Economy of Growth 765


    Chapter 24. Institutions and Growth 767


    24.1. The Impact of Institutions on Long-Run Development 767


    Chapter 25. Modeling Non-Growth Enhancing Institutions 777


    25.1. Baseline Model 781


    25.2. Technology Adoption and Holdup 795


    25.3. Inefficient Economic Institutions 798


    25.4. Exercises 802


    Chapter 26. Modeling Political Institutions 803


    26.1. Understanding Endogenous Political Change 803


    26.2. Exercises 815


    Part 9. Conclusions 817


    Chapter 27. Putting It All Together: Mechanics and Causes of Economic


    Growth 819


    Chapter 28. Areas of Future Research 821


    Part 10. Mathematical Appendix 823


    Chapter 29. Review of Basic Set Theory 825


    29.1. Open, Closed, Convex and Compact Sets 825


    29.2. Sequences, Subsequences and Limits 825


    29.3. Distance, Norms and Metrics 825


    Chapter 30. Functions of Several Variables 827


    30.1. Continuous Functions 827


    30.2. Convexity, Concavity, Quasi-Concavity 827


    ix Introduction to Modern Economic Growth


    30.3. Taylor Series 827


    30.4. Optima and Constrained Optima 827


    30.5. Intermediate and Mean Value Theorems 827


    30.6. Inverse and Implicit Function Theorems 827


    Chapter 31. Review of Ordinary Differential Equations 829


    31.1. Review of Complex Numbers 829


    31.2. Eigenvalues and Eigenvectors 829


    31.3. Linear Differential Equations 829


    31.4. Separable Differential Equations 829


    31.5. Existence and Uniqueness Theorems 829


    References (highly incomplete) 831


    x


    Please note: To fully download this free PDF,EBook files you need know All free.
    Found by internet command,site not saved pdf file
You May Also Like

Related PPT Template in the same category.