Lecture 15 The New Growth Theory(宏观经济学(南开大学,龚刚).ppt

Macroeconomics Lecture 15 The Theory of Economic Growth (I) Introduction The objective to present you the some stylistic factors, especially the convergence hypothesis, in economic growth. to introduce some classical models of economic growth Remark: the insufficiency in explaining economic growth is one of the shortcomings in Keynesian economics. Convergence Hypothesis: a Stylistic Factor? The growth and convergence in the richest countries Convergence Hypothesis: a Stylistic Factor? Convergence in OECD countries Convergence Hypothesis: a Stylistic Factor? Convergence in the worldwide Convergence Hypothesis: a Stylistic Factor? What we have learned The convergence seem to occur within OECD countries, but not in the worldwide. Since OECD countries are similar in their economic and political system, one may argue that one of the requirement to be included in the convergence is on the system, which should be similar to the OECD countries. Convergence Hypothesis: a Stylistic Factor? What we have learned (continued) The success in four Asia tigers seems to further support this argument. Yet the success in China seem to make a challenge to the above argument. Nevertheless, the stable political system, no significant upheaval and revolution should be required to be included in the convergence. The Harrod Model Some basic introductions The Harrod’s growth model can be regarded as a pioneer work in growth theory. This model is somewhat Keynesian in terms of its analytic framework (indicating the allowance of disequilibrium). The Harrod Model Assumptions: income (aggregate demand) is determined by investment via multiplier; investment is determined by entrepreneur’s expectation on demand; saving and capital-output ratios are fixed. The Harrod Model The structure form of the model Yt = (1/s)It It = F(Et-1) F’ 0 Et = Yt - (1/v)Kt Kt = Kt-1 + It w