Technological Progress and Growth.pptVIP

Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Technological Progress and Growth Chapter 12: Technological Progress and Growth Blanchard: Macroeconomics Technological Progress and the Production Function AN = Effective Labor. Assuming: Constant returns to scale Given state of technology 2Y = F(2K,2AN) xY = F(xK,xAN) Y/AN = f(K/AN) Technological Progress and the Production Function f(K/AN) Output per effective worker, Y/AN Capital per effective worker, K/AN Investment sf(K/AN) Investment, Capital, Output per Effective Worker Production f(K/AN) Output per effective worker, Y/AN Capital per effective worker, K/AN Determining the needed to maintain a given Assume: Then: A population growth rate/yr (gN) N grows at same rate as gN Rate of technological progress gA Growth rate of effective labor (AN) = gA + gN If: gA = 2% gN = 1%, then AN growth = 3% Determining the needed to maintain a given The level of investment needed to maintain : Or: Therefore: is needed to keep K constant Determining the needed to maintain a given For Example: And: (gA + gN)K is needed to ensure K increases at the  same rate as AN Required Investment to maintain K/AN = (d + gA + gN)K If: , then investment = 10% of K to maintain K Determining the needed to maintain a given Amount of Investment Needed/Effective Worker to