Macro16The Theory of Economic Growth (II)宏观经济学(南开大学,龚刚).pptVIP

Macroeconomics Lecture 16 The Theory of Economic Growth (II) Introduction The objective to introduce you the new growth theory in modern economics. back to the convergence hypothesis. to discuss the policy issue in economic growth. Introduction Recent developments in growth theory Endogenizing the saving ratio by introducing household optimization behavior Endogenizing the technology. Two basic approaches to express technology human capital approach (Lucas Model) knowledge capital approach (Romer Model) Human capital model The basic feature Express technology At as a human capital. What is the human capital An individuals human capital is simply his general skill (or knowledge) level. It reflects the individual’s quality. Human capital model Accumulation of human capital An individual’s human capital can be improved by education, health improvement among others. The Lucas equation on the human capital accumulation ?ht = ? ht-1(1-ut-1) (A) where h is an individual’s human capital level; u the proportion of the time that the individual uses for accumulating his human capital (education). Human capital model Some theoretical propositions regarding human capital External effect of human capital: suitability Income distribution effect Continuality (indicating education should start with infant) Creating, using, understanding technology need human capital. Human capital model Some theoretical propositions regarding human capital (continued) The return on human capital investment Generally, 30%, much higher than in fixed capital. The rate of return will be reduced with the increase in age (also indicating education should start with infant?). Long term investment (we shall start to work now!) More uncertain or risky from individual family point of view (indicating difficult to obtain loan from the commercial bank). Human capital model Aggregate production function Quantifying the human capital (Lucas 1988) According to Lucas (1988), a worker